Pricing revival crucial for telcom sector: Vodafone Idea chairman Kumar Mangalam Birla

Mumbai: Vodafone Idea chairman Kumar Mangalam Birla said a pricing revival is critical for the telecom sector and the tariffs continue to be the lowest in the sector while data consumption is highest in the world.

The telco’s CEO Ravinder Takkar also clarified that British parent Vodafone Group's win against the Indian tax authorities in the arbitration case will not have any impact on Vodafone Idea.

"Pricing revival is critical for the health of the telecom sector. Tariff continues to be the lowest while data consumption is highest in the world," Birla said during the telco’s virtual annual general meeting on Wednesday.

The telco, which has the lowest average revenue per user (ARPU), a key industry parameter, of Rs 114 has been pushing for an increase in tariffs to improve the financial health of the loss-making carrier, and the debt-laden industry.

The company clarified that it will not benefit from its parent Vodafone Group winning the global arbitration award.

“Vodafone arbitration will have no impact on Vodafone Idea," said CEO Ravinder Takkar. The British parent recently won a long-standing battle against the Indian tax department’s demand of Rs 20,000 crore in capital gains tax, in the telco’s $11.2 billion-deal in 2007 to take majority ownership of Hutchison Essar back.


This comes at a time when the telco needs funds to tide over a debt of Rs 1.7 lakh crore and pay statutory dues as well. So far, both parents—Aditya Birla Group and Vodafone Group—have maintained that they will not infuse fresh capital into the Indian telco.

Birla added that adjusted gross revenue (AGR) dues have added to the financial woes of the telecom operator and that efforts are being made to resolve the financial burden through staggered payments, which have been mandated by the Supreme Court (SC). Vi has to pay a balance of Rs 50,400 crore to the government over the next 10 years, till March 2031.

The operator, which recently went through a rebranding exercise, plans to raise funds via a mix of equity and debt to service AGR dues and look into network expansion to keep pace with rivals Bharti Airtel and Reliance Jio.

Takkar said that the board has approved additional fund raising and Rs 15,000 crore debt funding and potentially another Rs 15,000 crore equity funding. He added that the carrier is working with the telecom department on 5G trials, after it gets trial airwaves.