Reports indicate that the debt ridden Vodafone Idea, the telecom operator, is set to increase its tariffs soon. The announcement is expected in the near future. If confirmed, this would mark the second tariff hike within a year. Vodafone Idea CEO Akshaya Moondra mentioned that a second tariff hike should occur after nine months, rather than the typical 12-month gap between such increases. He explained that the current return on capital metrics justify this decision.
The report quotes Akshaya Moondra stating that, given the current state of the industry, a quicker tariff change is not only a possibility but also a necessity, as discussed during the post-earnings call.
Notably, telecom companies (Reliance Jio , Bharti Airtel and Vodafone Idea) had in July 2024 announced a tariff hike.
What Akshaya Moondra Said
“In a normal scenario, I would have said that a time gap of one year is ideal between two tariff increases. However, I would add to that, that given the place where the telecom industry in India is today…where the return on capital is…whether you take the market leader or you take anyone else…nobody is returning their cost of capital. And in that scenario, I would say it is fairly justified…if it can be faster, it could be nine months also I would say,” Vodafone Idea CEO said.
“I would say in a normal situation, a 12-month period is ideal to make any changes on tariffs. But given where the industry is today, the faster tariff change is probably a possibility, and the need of the hour,” he added.
Moondra also expressed optimism that a solution for the adjusted gross revenue issue will be found.
“…as we have been saying that post dismissal of curative petition where judicial route was closed…we have been actively engaged with the government to find a solution. As far as conversion is concerned, it is a part of the reforms package. And so while I understand it is at the government’s option, but the fact that the reforms package in 2021 it was provided that the conversion could be done…after the moratorium of period of four years…that clearly shows the intent…government has provided that in the reform package to support the industry, where this need arises,” he said. Government, he said, is very cognizant of the fact that support is needed this time.
Vodafone Idea on Tuesday reported narrowing of losses to Rs 6,609.3 crore during the December quarter, as the debt-laden telco clinched a sequential rise in ARPU (average revenue per user).
VIL, in its Q3 earnings release, had said the commercial launch of its 5G services in Mumbai is planned for March 2025 and Delhi, Bengaluru, Chandigarh, and Patna for April.
