Telecom industry needs to raise mobile tariffs regularly: Vodafone Idea

New Delhi: Cash-strapped telecom operator Vodafone Idea Ltd is of the view that the industry needs to raise mobile tariffs regularly as the hike revisions will let it generate reasonable returns and support future investments. Vi said that the telecom sector still works at unsustainably low prices.

All three private telecom players in India — Reliance Jio, Bharti Airtel and Vodafone-Idea Ltd (VIL) — last year raised charges for data, arresting average revenue per user (ARPU) declines.

Vodafone Idea Limited, an Aditya Birla Group and Vodafone Group partnership, last year got a fresh boost after the government extended a relief package to the sector. It added that revenue per user remains lower than historical trends.

“India continues to have the lowest tariffs globally, while the proliferation of unlimited data bundles has led to India having one of the highest data usage (per subscriber) in the world,” VIL said in its latest annual report.

The company thus believes that the industry will have to further raise tariffs at regular intervals, which is essential for operators to generate reasonable returns on their capital employed and support future investments, including new technologies, it added.

The ARPU levels remain lower in comparison to historic trends, despite consumers getting much more value in terms of unlimited voice and daily data allowances, compared to five years ago. VIL had 24.38 crore subscribers as of March 31, 2022, of which 11.81 crore were 4G users.

VIL stated that while the Supreme Court allowed past statutory dues to be paid in 10 years, the government announced a relief package for the industry in September 2021 to address liquidity challenges facing the telecom sector.

Post this, “the company has started to witness improvement in various operating KPIs including leading the league tables of Voice and Data experiences it offers to the customers. The pace of subscriber base decline has also reduced to some extent.”

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Moreover, the company is currently in talks with lenders and investors to get the requisite equity and/or debt funding which will enable it to restart the capex cycle and move towards the growth journey in line with its long-term strategic intent.

“The company is taking appropriate steps to grow its revenues further and thus reduce losses/earn profits by following a well-defined strategy,” the annual report said adding that its priority remains on driving ARPU improvement.

“During the year, the company has taken several tariff interventions specifically, effective November 25, 2021, the company increased the prepaid tariffs across all price points including unlimited plans as well as combo vouchers. All these initiatives are ARPU accretive, benefits of which are reflected in ARPU improvement from Rs 107 in Q4 FY21 to Rs 124 in Q2FY22,” it said.

Tariff hike remains critical to revive the sector and pricing structure has to change where operators have the ability to charge customers for incremental usage, the company added.