Vodafone Idea Official Proposes Increased Tariffs for High Data Consumers to Support Industry Growth

A senior official from Vodafone Idea has advocated for increased tariffs, suggesting that users consuming more data should pay higher fees. This approach aims to ensure the telecom industry can achieve reasonable returns while maintaining connectivity for all. During the earnings call for the quarter ending September 30, 2024, CEO Akshaya Moondra highlighted the need for tariff adjustments to cover capital costs.

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Vodafone Idea has committed to investing Rs 55,000 crore in its network over the next three years. In September, the company partnered with Nokia, Ericsson, and Samsung for a Rs 30,000 crore network expansion. This investment is crucial as the firm navigates financial challenges and seeks to enhance its service offerings.

Financial Challenges and Investments

The company is in talks with banks and financial institutions to raise Rs 25,000 crore. However, this process is hindered by uncertainties surrounding relief sought on a Rs 70,320 crore adjusted gross revenue (AGR) liability. Vodafone Idea has requested a waiver of a Rs 24,746.9 crore bank guarantee required for spectrum payments due between October 2025 and September 2026.

Moondra stated that this bank guarantee affects the company's ability to secure debt facilities needed for network investments. He emphasised that substantial investments are necessary to support new technologies and data growth while keeping tariffs affordable for all users.

Subscriber Base and Revenue Insights

The company's subscriber base declined from 21 crore to 20.5 crore, with its 4G users dropping from 12.67 crore to 12.59 crore over the quarter. Despite losing customers due to a recent tariff hike, Moondra noted that subscriber losses to BSNL are reversing swiftly due to improved network experiences.

Vodafone Idea's average revenue per user (ARPU) rose by 7.8% to Rs 166 in the September quarter, up from Rs 154 in the previous quarter. This increase followed a tariff hike in July but remains lower than competitors Reliance Jio and Airtel.

Impact of Tariff Hikes

All three private operators—Reliance Jio, Bharti Airtel, and Vodafone Idea—experienced subscriber losses to BSNL after recent tariff hikes. Moondra acknowledged that some subscriber losses will take time to recover but expressed confidence in regaining ground based on customer experience improvements.

BSNL plans to roll out 4G services nationwide by mid-next year, which could further impact subscriber dynamics. Meanwhile, Vodafone Idea's current capital expenditure plan includes raising Rs 24,000 crore through equity sales, with Rs 18,000 crore from a follow-on offer.

Debt and AGR Liability Concerns

The company recorded total debt exceeding Rs 2,22,470 crore at the end of September 2024. This includes Rs 3,271 crore owed to banks and financial institutions and Rs 2,12,260 crore in government dues. Vodafone Idea expects that any cash shortfall could lead to converting government dues into equity.

Moondra clarified that AGR relief was not part of their business plan submitted to banks but acknowledged lenders' interest in the matter. He expressed optimism about resolving these issues once clarity emerges regarding AGR liabilities.

The company continues discussions with banks for funding aimed at improving performance and cash generation. Moondra noted that while banks are hesitant about providing guarantees, they are open to debt funding for investments.