Floor price must for sector health; co not shy to take first step on tariff hike issue: VIL

New Delhi, October 30

Telecom operator Vodafone Idea on Friday said there was nothing that stops the industry from increasing prices, even as floor price discussions were on and that it would not shy away from taking the first step in this regard.

The telco further said that it expected to receive nearly Rs 6,400 crore from Vodafone towards Adjusted Gross revenue (AGR) liability, under an indemnity arrangement.

At an investor call post Q2FY21 earnings, Vodafone Idea MD and CEO Ravinder Takkar said in order to maintain healthy competition and for the health of the industry probably a “floor pricing will be required”.

“I don’t think that there is anything that stops the industry from increasing prices while floor price discussion is in place. It has been done before and I don’t see any reason why it can’t be done again,” Takkar said.

Vodafone Idea will not hesitate to take the first step in this regard, he emphasised.

“From our perspective...we are not shy to take the first step, we have taken it before, and we could take it again,” he said.

On the AGR issue, VIL Chief Financial Officer Akshaya Moondra said the company expected to get roughly Rs 6,400 crore from Vodafone Group towards statutory dues payment, as part of an indemnity arrangement.

“...total cap on the indemnity to be paid by Vodafone Group under this arrangement is about Rs 84 billion...Under the current payment in Q1 and Q2 cumulatively, we have received Rs 20 billion so balance Rs 64 billion is to be received over the remaining period against the AGR liability,” Moondra said.

Vodafone Idea on Thursday reported significant narrowing of losses to about Rs 7,218 crore for the September quarter and said signs of recovery were visible with gradual improvement in economic activities.

The debt-laden VIL’s losses in the Q2FY20 had been Rs 50,921.9 crore after it provisioned for Supreme Court mandated statutory dues.

In its earnings statement, VIL had, however, struck a note of caution saying its ability to continue as going concern is dependent on successful negotiations with lenders and ability to generate the cash flow that it needs to settle or refinance liabilities and guarantees as they fall due.

The gross revenue for the quarter ended September 30, 2020, came in at about Rs 10,791 crore, marginally lower than the same period the previous year. Revenue was, however, 1.2 per cent higher when compared sequentially, and the company had noted that the impact of nationwide COVID-19 lockdown has gradually started to ease. PTI