Vodafone Idea may increase prices this year

Telecom operator Vodafone Idea is likely to raise mobile services rates this year. But the operator says it depends on the market reaction to the increase in tariff that the company made in November.

During the earnings call, Vodafone Idea MD and CEO Ravinder Takkar said that the minimum price of Rs 99 set by the company for a month-long service is an inexpensive proposition for those who are using 4G services.

"We would expect that there could be another price hike in 2022, but certainly, at some point, the price hike will take place. The last one was almost two years earlier, which I believe is a bit long. We certainly would expect less than two years, but in 2022 we will have to see how quickly these prices get embedded. Probably, it could be 2023 as well," Takkar said.

Despite the tariff hike, its average revenue per user (ARPU) declined by about 5 per cent to Rs 115, compared to Rs 121 in the same quarter of 2020-21. 

The debt-ridden company has opted to pay interest of around Rs 16,000 crore through preferential share. This will result in the government holding 35.8 per cent stake in the company.

VIL subscribers have declined from 26.98 crore to 24.72 crore in the year-ago period because of the increase in services rate by the company. Its consolidated loss was Rs 7,230.9 crore for the third quarter ended December 2021. The company had posted a loss of Rs 4,532.1 crore a year ago.

Consolidated revenue from operations declined by 10.8 per cent to Rs 9,717.3 crore from Rs 10,894.1 crore in 2020-21.

VIL CFO Akshaya Moondra said that the conversion of debt into equity will reduce interest charge by Rs 1,600 crore on an annual basis.

VIL's total gross debt, excluding lease liabilities and including interest accrued but not due, as of December 31, 2021 stood at Rs 1,98,980 crore, comprising of deferred spectrum payment obligations of Rs 1,11,300 crore, AGR liability of Rs 64,620 crore that are due to the government and debt from banks and financial institutions of Rs 23,060 crore.

(With PTI inputs)