Vodafone Idea Expects Another Hike in Mobile Services Rates This Year

Loss-making telecom operator Vodafone Idea may raise mobile services rates this year as well but it will depend on the market reaction to the increase in tariff that the company made in November, a top official of the company said on Monday.

Vodafone Idea MD and CEO Ravinder Takkar during the earnings call said that the minimum price of Rs. 99 set by the company for about a month long service is not an expensive proposition for those who are using 4G services.

"We would expect that its possible 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 2 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.

VIL subscriber base declined to 24.72 crore from 26.98 crore in the year-ago period because of increase in services rate by the company.

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

Debt-ridden telecom operator Vodafone Idea last week reported widening of its consolidated loss to Rs. 7,230.9 crore for the third quarter ended December 2021.

The company had posted a loss of Rs. 4,532.1 crore in the same period a year ago.

Consolidated revenue from operations declined by 10.8 percent to Rs. 9,717.3 crore from Rs. 10,894.1 crore in the corresponding quarter of 2020-21.

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.

The company's cash and cash equivalents were Rs. 1,500 crore and net debt stood at Rs. 1,97,480 crore.

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 percent stake in the company.

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.