Vodafone Idea won’t shy away from increasing the currently unsustainable mobile tariffs: Ravinder Takkar, MD

“We’ve taken the lead on hiking tariffs before (in December 2019) and won’t shy away from doing it again and are confident others will follow us as the current rates are unsustainable and pricing needs to improve quickly,” managing director Ravind...

MUMBAI | KOLKATA: Vodafone Idea (Vi) said its plans to raise as much as Rs 25,000 crore are getting a positive response and are set to conclude in two to three months.

“We are in discussions with several interested parties to raise funds through the debt and equity routes. The interest levels have been very good and the ongoing discussions are progressing well… we hope to conclude the fund-raise in two to three months at most… we are very optimistic on this score,” managing director Ravinder Takkar said on a post-earnings call with analysts on Friday.

ET had reported that Vi has reached out to credit funds such as Oak Hill Advisors, Marathon Asset Management, Spectrum Asset Management, Anchorage Capital and Providence Investment Management as well as private equity firms such as Blackstone and asset reconstruction companies for raising the funds that will be used to expand networks and pay adjusted gross revenue dues.


Takkar said Vi won’t shy away from increasing the currently “unsustainable” mobile tariffs.

“We’ve taken the lead on hiking tariffs before (in December 2019) and won’t shy away from doing it again and are confident others will follow us as the current rates are unsustainable and pricing needs to improve quickly,” he said.

Bharti Airtel chief executive officer Gopal Vittal said earlier this week that tariffs need to go up, although he maintained that the Sunil Mittal-led telco wouldn’t want to take the lead.
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Shares of Vi climbed 4.4% to Rs 8.75 on the BSE on Friday, a day after the telco said its net loss in the second quarter narrowed to Rs 7,203.4 crore from Rs 25,467 crore in the first, helped by cost reduction and lower impairment charges.

Takkar estimated the government would soon take a favourable view on setting floor prices, which, along with tariff increases, would boost the health of the sector and bring average revenue per user (ARPU) back to the Rs 300 level.

Vi’s ARPU was Rs 119 in the quarter ended September while rival Airtel clocked in Rs 162.

The regulator is consulting telcos and other stakeholders on the merits of bringing in a floor price for the debt-laden sector.
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“Ongoing consultations around floor price (for data rates) don’t stop anyone from hiking tariffs, but the timing has to be right… we can assure you that the tariff hike decision is not far away,” Takkar added.

Vi has over Rs 50,000 crore of adjusted gross revenue dues payable over 10 annual instalments through March 31, 2031. While the telco’s parent companies – Aditya Birla Group and Vodafone Group Plc – won’t invest any fresh equity, the UK-based Vodafone has to put in some money towards AGR dues.
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“A balance Rs 6,300 crore is due from Vodafone Plc… but the next wave of receipts from British co-parent towards AGR dues will happen only after March 31, 2022, when the next instalment is due,” chief financial officer Akshaya Moondra said.

The telco plans to expand 4G coverage, but this decision will be taken once the funds are tied up, Moondra said.

Takkar welcomed rival Reliance Jio’s new set of post-paid plans, although he said it was an indication that the earlier plan didn’t get traction with customers.

“Post-paid customers tend to be less price sensitive. They tend to be much more sticky,” Takkar said. “Jio had a post-paid plan significantly lower than we had. That did not get any traction… This is a clear indication to move towards higher ARPU and is a welcome strategy.”
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