Fundraising on track and tariff hike at right time, says Vodafone Idea

Vodafone Idea (Vi) on Monday said its fundraising talks were progressing well even as it ramps up focus on 4G services. 

The telco’s board had, in September 2020, approved of a Rs 25,000-crore fundraising plan and the management had set a 3-month timeline to complete it (by early 2021).

“I do not believe it (fundraising) is taking an inordinate amount of time. There is interest from various participants in helping us in fundraising,” said CEO and MD Ravinder Takkar in a post-results conference call.

He added that the company would raise tariffs at the right time. Takkar said Vi’s network was 5G-ready and it would roll out 5G as and when the ecosystem becomes ready for launch. 

The operator posted Rs 4,532 crore net loss in Q3FY21 on the back of flat revenue growth and gains from stake sale in Indus Towers. It lags peers in parameters such as average revenue per user (ARPU). 

Analysts at Goldman Sachs estimate that its ARPU needs to increase 1.9x its current level (Rs 121 in Q3FY21) to meet upcoming payment obligations related to debt, spectrum and adjusted gross revenue (AGR) dues.

Takkar said the company will not wait for competition to increase prices. The company had undertaken a limited tariff hike in family pack plans in select circles, such as Uttar Pradesh.

“We have started to gain momentum and traction in the market. Our 4G subscribers are growing and our customer engagement is improving,” he added.

The company is stepping up focus to add more 4G customers and intends to close down 3G services by FY22. However, it will continue with 2G services. Around 55 per cent of its 269.8 million customers use 2G services.

 “3G is not required anymore and is continued only because some people are using devices that only run on 3G,” chief financial officer (CFO) Akshaya Moondra said. “Our intention is to close 3G as soon as possible while keeping consumer requirement in mind,” he added.

Moondra said discontinuation of interconnect usage charges will impact company’s revenue and expenses by around 10 per cent. Impact on earnings before interest, tax, depreciation, and amortisation (Ebitda) will be around Rs 80 crore each quarter as a consequence, he added.

Takkar reiterated that the firm would roll out 5G services when the ecosystem gets ripe. 

Last month, Airtel carried out successful demonstration of 5G service in Hyderabad. Airtel said the full impact of 5G experience would be available to customers upon availability of adequate spectrum and receipt of government approvals.