NEW DELHI: Debt-laden telecom operator Vodafone Idea (VIL) on Thursday said it would go ahead with tariff hikes by the end of this year. During an earnings call, CEO Ravinder Takkar, who is soon going to take over as the Chairman of the VIL board, said 5G plans should definitely be offered at a premium over 4G.
“Tariff hike environment is right and we won’t hesitate to take leadership in hiking prices. Customers have taken November 2021 tariff hikes very well. Almost all of it has flown to our ARPU numbers. Another tariff hike is possible by the end of the year,” said Takkar.
He further added that the company has seen the growth of ARPU for four consecutive quarters now. “The average revenue per user or ARPU has increased consistently from Rs 104 a year ago to Rs 128 now.” Vodafone Idea, India’s third-largest telecom operator is not in a good health as its net loss marginally narrowed to Rs 7,297 crore in Q1FY23, from Rs 7,319 crore in the year-ago period.
Its subscriber base continued to decline to 240.4 million in the first quarter of FY23. However, the company claimed that its 4G subscriber base continued to grow and with 1.0 million customers added in Q1. Its 4G base stood at 119.0 million, while ARPU for the quarter was at Rs 128.
Therefore, the industry people are of the view that VI’s 5G rollouts would remain constrained in the near term, given its current cash problem. Japanese brokerage firm Nomura in its report said with its current cash EBITDA run-rate (Rs 8,400), it is insufficient to increase capex as there are large upcoming debt repayments (Rs 7,000) and also delays in external fundraising.
“Impending 5G rollouts by peers could lead to accelerated market share losses for VIL, in our view,” said Nomura in its research. The company has successfully bid for 6228.4 MHz of spectrum worth Rs 18, 799 crore in the just concluded 5G auction. The company has opted to pay the sum over the next 20 years in equal annual instalments at Rs 1680 crore a year.
Telecom operator continues to be in loss