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Informist, Wednesday, Feb. 12, 2025

 

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--Vodafone Idea CEO: Need more investment, tariff hikes for future growth 
--CONTEXT: Vodafone Idea mgmt's comments in post-earnings analyst call 
--Vodafone Idea: In "normal" scenario, one-year gap in 2 tariff hikes ideal 
--Vodafone Idea: Able to attract customers, retention a challenge 
--Vodafone Idea: Due to low return on capital, faster tariff hikes needed 
--Vodafone Idea:Amid low return on capital, hikes can be taken in 9-month gap 
--Vodafone Idea CEO: Discussion on with banks on borrowing more
--Vodafone Idea: Got back some subscribers lost to BSNL post tariff hike 
--Vodafone Idea: Seeing constant rise in 5G devices on our network 
--Vodafone Idea: Banks waiting for clarity on AGR dues before giving loans 

 

By Arya S. Biju and Anshul Choudhary

 

MUMBAI – Vodafone Idea Ltd. feels more tariff hikes are needed for future growth as the telecommunication industry in the country is adversely affected due to low return on capital, its Chief Executive Officer Akshaya Moondra said at a post-earnings conference call with analysts. Taking faster tariff hikes is justified amid the weak return on capital environment of the industry, Moondra said.

 

" ...in a normal situation, a 12-month period is ideal to kind of make any changes on tariffs. But given where the industry is today, a faster tariff change is probably a possibility and the need," Moondra said. Vodafone Idea had last raised tariffs in July. 

 

Moondra said the sector requires more investment to support emerging technology and the rapid increase in data consumption. Despite the gains from tariff hikes taken by private telecom operators in July in their average revenue per user, the industry's return on capital remains low, he said. Further tariff hikes are thus necessary to help the industry to recover its cost of capital and to sustain growth going forward, he said.  

 

The company said it has restarted discussions with banks on further borrowings. The government's move to waive the bank guarantee to be submitted for spectrum auctions before Telecom Reform 2021, has given confidence to the banks, the company management said. For the past few years, the company has been surviving on external cash infusion and a four-year moratorium on regulatory dues.

 

However, the banks are also seeking some clarity on the final position in the calculation of adjusted gross revenue, he said. Earlier the Supreme Court had rejected a curative petition filed by Bharti Airtel Ltd., Vodafone Idea and other telecom companies against the calculation of adjusted gross revenue by the Department of Telecommunication.  

 

On the continued decline in its subscriber base, the company said it is able to attract customers but faces challenge in retaining them due to lower investments. The telecom company lost over 5 million subscribers in the December quarter, taking its total customer base to 199.8 million. The company also saw a marginal decline in data subscribers during the quarter to 134.2 million. While subscriber base has declined, the management finds solace in the constant rise in the number of fifth-generation devices on its network, which is likely to translate into cutomer gains once they launch 5G services across the country. The company, however, did not disclose the number of 5G customers on its network. The company on Tuesday said it will launch its fifth generation telecom services in Mumbai by March and in Delhi, Bengaluru, Chandigarh and Patna by April. 

 

On investments in network expansion, the telecom company said the current investments are only the beginning of a much larger plan on investments. The company said even with its minimal investments, it is witnessing early green shoots with wider communication with customers on network expansion plans and pace of its rollout. This is reflected in the positive visitor location register subscriber numbers for December and January combined in 11 circles, the management said. The company, however, did not disclose the numbers of visitor location register subscribers for the two-month period.

 

Going forward, the company expects its visitor location register subscriber numbers to improve further on account of the growing investments. For the December quarter, the company reported a visitor location register subscribers base of 176.5 million lower than 179.5 million reported in the September quarter. 

 

Vodafone Idea announced its Oct-Dec earnings post-market hours Tuesday. The company's consolidated net loss narrowed both quarter-on-quarter and year-on-year to INR 66.09 billion in the December quarter, and its consolidated sales grew 1.7% sequentially to INR 111.2 billion. The latest quarter marked the 26th consecutive quarter of net loss for the telecommunications company. Wednesday, shares of the company closed at INR 8.39 on the National Stock Exchange, down 4.9%.  End

 

Edited by Saji George Titus

 

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