Struggling telecom operator Vodafone Idea Ltd says the industry needs to raise tariffs at regular intervals as the sector still operates at unsustainably low prices. Revisions will allow the company to generate reasonable returns and support future investments.
The joint venture of Aditya Birla Group and Vodafone Group, which last year got a fresh lifeline after the government extended a relief package to the sector, said per user revenue remains lower than historic trends. All three private telecom operators — Reliance Jio, Bharti Airtel and Vodafone-Idea Ltd (VIL) — last year raised charges for data, arresting average revenue per user (ARPU) declines.
Despite this, “the industry still operates on unsustainably low tariffs”, Vodafone Idea said in its latest annual report. “India continues to have the lowest tariffs globally, while the proliferation of unlimited data bundles have led to India having one of the highest data usage (per subscriber) in the world,” it said.
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.
“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,” the firm said. VIL had 24.38 crore subscribers as of March 31, 2022, of which 11.81 crore were 4G service users. 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.
“The company has started to witness improvement in various operating parameters including leading the league tables of voice and data experiences. The pace of subscriber base decline has also reduced to some extent,” it noted. The company is in discussion with lenders and investors to get the requisite equity and/or debt funding. Vodafone Idea got spectrum in the priority circles in the recently concluded 5G auctions.