Voda Idea may move first on rate hike: CEO2 min read . Updated: 30 Oct 2020, 10:31 PM IST
- Current prices are unsustainable, Takkar tells analysts at a post-earnings call
- The telco will not shy away from hiking prices and hopes others in industry will follow too: CEO
Vodafone Idea could be the first among the three largest private telecom players in India to hike the prices of voice and data services. The telco will not shy away from raising prices and will set a precedent for others to follow, the company’s chief executive (CEO), Ravinder Takkar, said on Friday.
The telco’s parent, Vodafone Group Plc, is expected to pay another ₹6,400 crore towards statutory adjusted gross revenue (AGR) dues payment, as part of an indemnity arrangement, the company’s chief financial officer Akshaya Moondra said.
Current price levels are unsustainable, Takkar told analysts at a post-earnings call. The industry needs to have an average revenue per user (Arpu) of ₹200 in the short run and ₹300 eventually, he said.
“If you look at the current pricing, there is something wrong with it...We have said before that we will not shy away from hiking prices and we will be happy to be the first one to do so. We hope others in the industry will follow," Takkar said.
The industry cannot continue to function at the current prices for voice and data services, rival Bharti Airtel Ltd CEO Gopal Vittal reiterated earlier this week.
However, neither Airtel nor Vodafone have specified the timeline for the tariff hike. Prices were last raised in December 2019.
The Vodafone Idea chief also said the Telecom Regulatory Authority of India (Trai) is looking at setting a floor price for voice and data services on a priority basis. The regulator recently met representatives of Vodafone, Airtel, and Reliance Jio Infocomm Ltd, to discuss floor pricing for services, which may improve the health of the industry.
Takkar said the company will continue to focus on signing up 4G customers and invest in improving user experience on the newly-integrated network of erstwhile Vodafone India and Idea Cellular. As of 30 September, the operator had 106.1 million 4G users, up from 104.6 million in the previous quarter.
The telco’s Arpu rose to ₹119, up from ₹114 in the June quarter and ₹107 a year ago, despite the subscriber base declining to 271.8 million, from 279.8 million in April-June.
The AGR overhang is largely behind the company, and the telco will now focus on its strategy to gain customer mindset and optimize cost for incremental savings, Takkar said.
Vodafone Idea has already paid ₹7,854 crore in AGR dues, but still owes more than ₹50,000 crore to the department of telecommunications. However, company will not have an annual instalment before 31 March 2022, according to a Vodafone Idea statement.