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    Operational challenges remain, tariff hikes needed: Voda Idea

    Synopsis

    “While the operating challenges remain, the increasing digital penetration, increasing content consumption, especially through video and social media usage and increasing e-commerce, is driving strong demand for high-speed mobile broadband connectivity for internet,” outgoing chairman Himanshu Kapania said in his address.

    Operational challenges remain, tariff hikes needed: Voda IdeaiStock
    VIL is a joint venture between India’s Aditya Birla Group and UK’s Vodafone Group.
    Cash-strapped Vodafone Idea (VIL) said that incremental tariff hikes are crucial to improving industry health as the sector operates at unsustainably low prices and average revenue per user (ARPU) remains lower than historical trends.

    “While the operating challenges remain, the increasing digital penetration, increasing content consumption, especially through video and social media usage and increasing e-commerce, is driving strong demand for high-speed mobile broadband connectivity for internet,” outgoing chairman Himanshu Kapania said in his address in the annual report released Sunday.

    He further said that post successful completion of network integration exercise and realization of merger synergies, the telco had undertaken a cost optimization exercise and realized 90% of the targeted Rs 4000 crore annualized opex savings on a run rate basis in FY22.

    “All these incremental digital initiatives will improve revenue and profitability and subsequently strengthen your Company’s overall competitive position and revenue in the longer run,” he added.

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    As on March 31, 2022, VIL has 243.8 million subscribers with an active subscriber base of 226.08 million and 118.1 million 4G users. It lost another nearly 4 million users in the April-June quarter. Net loss for fiscal 2022 stood at Rs 28245.4 crore, on revenue of Rs 38489.5 crore. Net loss a year ago was Rs 44233.1 crore on revenue of Rs 41933.1 crore.

    A joint venture between India’s Aditya Birla Group and UK’s Vodafone Group, VIL along with competitors Reliance Jio and Bharti Airtel hiked tariffs across all unlimited prepaid bundled plans, entry level combo voucher plans as well as post-paid plans late last year.

    “While the tariff interventions have helped arrest ARPU decline during the year, the industry still operates on unsustainably low tariffs,” the telco said in the report released Sunday.

    It added that India continues to have the lowest tariffs globally, while the proliferation of unlimited data bundles have led to the country having one of the highest data usage (per subscriber) in the world.

    Further, the ARPU levels remain lower in comparison to historic trends, despite the fact that the consumer gets much more value in terms of unlimited voice and daily data allowances, compared to five years ago.

    “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,” VIL said in the report.

    The overall tele-density for India as of March 2022 stood at 83.1 per cent, suggesting there is still a proportion of population which is yet to start using mobility services.

    This holds true especially for rural areas where tele-density is still low at 57.9 per cent, which remains a significant opportunity for the Indian telecom operators.

    “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.

    The company said 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,” it noted.

    VIL further said that consolidation of the industry to three large private operators and one government operator positions the surviving operators well to benefit from the growth opportunities on the back of India’s digitalization trend.

    “Further, as part of its digital first approach, your company has renewed its focus on digitalization of distribution channel to completely automate sales process creating seamless and efficient journey for the channel partners,” the telco said.

    While the company continues to focus on enterprise mobility and fixed line connectivity, it also has incremental focus on new revenue streams and strengthening proposition on Internet of Things (IoT) and cloud service. It will continue to strengthen partnerships with customers with a range of offerings like Vi Integrated IoT, an end to end IoT solution, Managed SIP, Vi Cloud Firewall Service and Business Plus bundled mobility offering.


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    ( Originally published on Aug 07, 2022 )
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