Vodafone Idea (Vi) likely to hike tariff rates by 20%

Telecom giant Vodafone Idia (VI) is about to increase its tariffs by 15-20 percent in the month of December. The hike will take place aiming for financial recovery for the company. The company has already lost about 8 million subscribers in the second quarter of the FY21.

Earlier the Managing Director of Vi, Ravinder Takkar had said that the present tariff rates are “unsustainable” and it would not “shy away” from being the first to increase them, confident that its rivals will follow suit.

“Ongoing consultations around floor price (for data rates) doesn’t stop anyone from hiking tariffs, but the timing has to be right, but we can assure you that the tariff hike decision is not far away,” Takkar told analysts after the second-quarter results.

However, the telecom company has already suffered from customer crises in the July-September quarter. while the rival companies like Jio added 7 million subscribers compared with Airtel’s 14 million on the other hand Vi lost 8 million users.

The situation is critical for the company as it needs to raise rates urgently to pay the installments of its gross revenue (AGR) dues of over Rs 50,400 crore and invest in its 4G network to bridge the gap with rivals and retain subscribers.

The company is in internal talks of raising tariffs by as much as 25%, which may be difficult to implement at one go. A hike in tariff rates is also needed because Vi’s average revenue per user (ARPU) of Rs 119 at the end of the September quarter still lags that of Bharti Airtel (Rs 162) and Jio (Rs 145). However, the company previously increased rates in December 2019, the first time they did so since the entry of Reliance Jio Infocomm in 2016.

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