Vodafone Idea CEO says competition makes telcos’ revenue unsustainable
Vodafone Idea CEO Balesh Sharma said all the three operators are burning cash and no one can expect them to invest in such a situation
Mumbai: The largest telco by subscribers Vodafone Idea said the market is “unsustainable” due to aggressive competition and warned that it’s detrimental to government’s flagship initiatives like Digital India.
In his first interaction after the merger of the two companies, chief executive Balesh Sharma said Thursday here that all the three operators are burning cash and no one can expect them to invest in such a situation.
Blaming the low average revenue per user (ARPU) all the three operators, reported massive drop in ARPU in the range of Rs131 for Reliance Jio and a low Rs100 for Airtel) for the cash flow troubles that the domestic telcos face and the resultant underinvestment in the network, he said against this in the neighbouring China the higher ARPU makes it comfortable for operators there to invest for the future.
He also said there is no clarity on when the pricing situation will improve either in the domestic market.
Sharma said the company is advancing the projected Rs14,000 crore savings to come in from the synergies arising out of the merger, by two years to FY21.
The company is undertaking a slew of initiatives, including better utilisation of towers to achieve the synergy benefits, he said, adding they will be investing Rs27,000 crore over the next two fiscals.
It is also committed to pay Rs3,000 crore towards spectrum fees and interest by March and Rs12,000 crore in FY20, he said.
Vodafone Idea shares tanked 7% at Rs41.45 bringing down its market cap to a low Rs19,732.4 crore on the BSE, while the benchmark Sensex shed 0.62%.
Editor's Picks »
- Markets yet to warm up to KEC International’s record order book
- Indraprastha Gas and Mahanagar Gas shares are low on fuel
- Overhang of capacity constraints lifts for ACC, Ambuja Cements
- Stock market traders fall for the ‘buy rural’ narrative, once again
- Continuing volume momentum puts Indian ports in a good position