Telco aims to conclude fundraising by March following renewed investor interest
Listen to this article
NEW DELHI :
Vodafone Idea (Vi) may go for another tariff hike in 2022, said chief executive officer and managing director Ravinder Takkar said in a conference call with analysts on Monday, adding that the last round of tariff hikes in November happened after two years which was too long.
Vi aims to conclude fund raising by March this year following renewed interest from investors, after opting for moratorium on spectrum payments and conversion of interest from deferment to equity, the top executive said, adding that funds would be used to build higher capex for improving 4G network coverage.
Vi also expects to receive majority of ₹170 billion in bank guarantees back from the government which will reduce bank debt exposure and in turn provide new bank funding.
“We would expect that it's possible that it could be another price hike in 2022, but certainly, at some point, a price hike will take place," Takkar said.
In the last two quarters, the carrier increased tariffs on entry-level prepaid plans from Rs 49 to Rs 79 and increased tariffs on certain postpaid plans across retail and enterprise segments. It also moved the entry-level prepaid plan to Rs 99, which helped improve ARPU by 5.2% to Rs 115 in December to ₹109 in the prior quarter.
Takkar noted that the last price hike in November 2021 was almost two years later, “which I believe is a bit too long. So, we certainly would expect less than two years," Takkar said. He added a caveat that in 2022 the company will wait and see the pace at which the tariff hikes get embedded. “Probably, potentially it could be in 2023 as well," he stated.
Takkar downplayed the loss of 5.8 million subscribers in its customer base and dip in data usage, attributing it to SIM consolidation and the impact of tariff hikes. The carrier saw 0.8 million increase in 4G customers in the December ended quarter.
Vodafone Idea’s loss widened in the December quarter even as the struggling telecom operator reported higher revenue and average monthly customer phone bills. Loss widened to Rs 7,230.9 crore in the three months ended 31 December from Rs 7,132.3 crore in the preceding quarter, while revenue rose sequentially by 3% to Rs 9,717 crore from Rs 9,406 crore. In the year-ago period, the company had reported a loss of Rs 4,532 crore on revenue of Rs 10,894.
The average revenue per user, a key profitability metric for the telecom sector, increased by 5.2% to Rs 115 in the December quarter from Rs 109 in the preceding three months, reflecting the impact of tariff hikes in November.
Takkar said that the impact of the tariff hikes will be seen into the quarter ending March 2022 and the following quarter as well.
The debt-laden carrier which saw its net-debt increasing to Rs 1.97 trillion as of 31 December from Rs 1.94 trillion in the year-ago period,
“We have seen renewed interest from investors. We will make suitable disclosures on the fundraising as appropriate to the target to conclude this exercise during this fiscal year," Vi chief executive officer and managing director Ravinder Takkar said in a conference call with analysts on Monday.
In response to a question on the quantum and timeline of return of bank guarantees from the department of telecommunications, as part of the relief package offered to the telecom sector, chief financial officer Akshaya Moondra said that a total of ₹170 billion was expected to be returned, of which ₹20 billion was related to license fee – of which half has been refunded – and the rest was related to spectrum charges which the government was still processing.
The loss-making carrier’s gross debt increased to Rs 1.99 trillion in the December quarter, which comprised deferred spectrum payment obligations of Rs 1.1 trillion, adjusted gross revenue (AGR) liabilities of Rs 64,620 crore, and borrowings of Rs 23,060 crore from banks and other financial institutions.
“We are expecting that based on this bank guarantee reduction and exposure of banks going down to this extent, we should be able to substitute it by new facilities which will be a mix of funded facilities and non-funded facilities in the form of LCs (line of credit), which will enable us to get vendor finance, which will then effectively becomes a funded facility," Moondra said.
“So we are expecting that entire return of bank guarantees should become available to us in the form of new bank funding," he added.