Vodafone Idea expects 5G to be price at a premium with more data comes with plans compare to 4G services at present, a top company official said.
Vodafone Idea (VIL) Managing Director and Chief Executive Officer Ravinder Takkar, during an earnings call, said the company has spent a significant amount in acquiring spectrum in the recently-held auctions which calls for a need to charge premium for 5G services.
It expects overall tariff for mobile phone services to go up by the year-end.
Ravinder Takkar Said :
“Given the fact that a fair amount of money has been spent on spectrum, we believe that 5G should be priced at a premium to 4G. You can price it at a premium, but of course within that premium you could have a situation where a number of gigabytes that you get are more because you are consuming potentially more, given the extra bandwidth that you get in 5G,”.
Ravinder Takkar adds that the increase in data consumption on the 5G network will depend on use cases that are develop and adopt by consumers.
Vodafone Idea acquire spectrum worth Rs. 18,800 crore which includes radiowaves in the mid band (3300 MHz band) in 17 priority circles and spectrum in 26 GHz band in 16 circles for 5G services.
VI also acquire additional 4G spectrum in three circles of Andhra Pradesh, Karnataka and Punjab.
The fresh spectrum bid adds an annual installment liability of Rs. 1,680 crore on the company.
VIL has post marginal narrowing of its consolidate loss to Rs. 7,296.7 crore for the June quarter compare to the year-ago period, as tariff hikes boost its realisations.
The telecom loss stood at Rs. 7,319.1 crore in the year-ago quarter.
VIL’s revenue from operations grew to about Rs. 10,410 crore in the quarter end 30th June, 2022, improving nearly 14% from the year-ago period.
Its Average Revenue Per User or ARPU, a key monitorable for telecom players, stood at Rs. 128 per subscriber for the quarter, compare to Rs. 104 in Q1 FY22.
This represent an improvement of 23.4% year-on-year, help by tariff hikes.
Ravinder Takkar Said :
“Just to summarise that on the 4G pricing, I think there is certainly an opportunity based on the value that has been continuously provided to the consumers and how the first few price increases have been absorbed in a seamless manner, I think there’s an opportunity to do that soon,”.
Ravinder Takkar also said the investment in the company’s network has been impact due to liquidity issues.
VIL’s Chief Financial Officer Akshaya Moondra said the company has strategically place bids for spectrum and its ongoing fundraising plans include capital expenditure calculation for the 5G network.
The debt-ridden firm said there is positive momentum in its fundraising exercise with promoters’ recent investment in the company.
At the end of the April-June 2022 quarter, VIL’s total gross debt (excluding lease liabilities and including interest accrued but not due) stood at Rs. 1,99,080 crore, comprising of defer spectrum payment obligations of Rs. 1,16,600 crore, AGR liabilities of Rs. 67,270 crore that are due to the government, and debt from banks and financial institutions of Rs. 15,200 crore.
Akshaya Moondra said the company has clear a lot of bank debt and the Department of Telecom (DoT) has return a bank guarantee worth Rs. 17,000 crore.
Akshaya Moondra Said :
“We are engaged with the bank that our exposure has come down. Look at our external debt and EBITDA, we are in a very fairly comfortable position. There is a fairly long moratorium to service the government’s debt. Banks understand this and based on our discussion with them, we should be able to take it to a conclusion in the near future. We will be taking new debt primarily for investments,”.
Talking about conversion of interest into equity allocation to the government, Akshaya Moondra said the company has confirm an amount of Rs. 16,130 crore to the DoT and final confirmation from the department in this regard is awaited.
Government is expect to get around 33% stake in VIL when the conversion of interest into equity is confirm.
