Vodafone Idea Might Raise Tariffs Further, Says CEO

At an analyst call, Vodafone Idea CEO Ravinder Takkar said that Vi might go for a tariff hike this year. He reasoned that since the last hike came after 2 years, another tariff hike has become possible.

Vodafone Idea Looking to Raise Tariffs Again

Talking about the price hike, Takkar said, “we would expect that it's possible that it could be another price hike in 2022, but certainly, at some point, a price hike will take place". The telco has increased tariffs multiple times over the last two quarters. Starting with increasing the tariffs on its entry-level plans from ₹49 to ₹79, it increased tariffs on some postpaid plans too. Along with this, it has already moved its entry-level plan to ₹99. All of this has helped the telco improve its ARPU; the same improved by 5.2% to ₹115 in December to ₹109 in the prior quarter.

Takkar also commented that before November 2021, the last price hike happened two years ago. Therefore, he said that the next tariff hike will certainly happen in less than two years. However, he left things up in the air, saying that Vodafone Idea will wait and see how the tariff hike gets embedded. "Probably, potentially it could be in 2023 as well," Takkar said. He added that the telco will feel the effects of the tariff hikes in this quarter and the next.

While increasing tariff might have improved ARPU, it saw Vi lose 5.8 million users over the quarter and its data usage dip. However, the CEO attributed the loss to SIM consolidation, and of course, tariff hikes. Incidentally, while Vodafone Idea managed to increase its revenue sequentially by 3% to ₹9,717 crores from ₹9,406 crores, its losses widened to ₹7,230.9 crores in the Q3FY22 from ₹7,132.3 crores in the preceding quarter. Along with this, Vodafone Idea's gross debt increased to almost ₹2 trillion in the quarter just concluded; this includes deferred spectrum payment obligations of ₹1.1 trillion, AGR liabilities of ₹64,620 crore, and borrowings of ₹23,060 crores from banks and other financial institutions.

Renewed Interest in Vodafone Idea

Incidentally, the telco has been looking to raise funds, after the investors have started coming back. Vodafone Idea has set a March deadline for completing the fundraiser, Takkar said. Notably, Takkar attributed the renewed interest to the telco opting for a moratorium on statutory dues and converting its interest to equity. It has given the telco quite a lot of breathing space, and any worries of it going under have all but vanished. “We have seen renewed interest from investors. We will make suitable disclosures on the fundraising as appropriate to the target to conclude this exercise during this fiscal year," he said.

Takkar added that the telco will use funds to increase Capex on its 4G network.

What's more, since the government will return the telco's ₹170 billion in BGs,  the telco will also look towards bands to raise funds. “We are expecting that based on this bank guarantee reduction and exposure of banks going down to this extent, we should be able to substitute it by new facilities which will be a mix of funded facilities and non-funded facilities in the form of LCs (line of credit), which will enable us to get vendor finance, which will then effectively becomes a funded facility," Vodafone Idea CFO Akshaya Moondra said. Notably, Vi has already received half of the BGs back from the DoT.

“So we are expecting that entire return of bank guarantees should become available to us in the form of new bank funding," he added.