5G should be priced from Premium to 4G with more data, overall fee schedule expected to increase, says Vodafone Idea MD
A top company official said on Thursday that heavily indebted Vodafone Idea expects 5G to cost more with more bundled data plans than current 4G offerings. Vodafone Idea (VIL) CEO and CEO Ravinder Takkar, during an earnings press conference, said the company has spent a significant amount of money acquiring spectrum in organized auctions. Recently, it has been required to charge a premium for 5G services.
It expects overall prices for mobile phone services to increase by year-end.
“Given the fact that a fair amount has been spent on the spectrum, we believe 5G should be priced high 4G. You can price it at a premium, but of course within that premium you may run into cases where you get more gigabytes because you’re consuming more, with additional bandwidth that you get in 5G,” Takkar said.
He added that the increase in data consumption on 5G networks will depend on the use cases developed and accepted by consumers.
Vodafone idea The obtained spectrum has a value of Rs. The 18,800 crore includes mid-band (3300 MHz) radiation in 17 priority circles and 26 GHz spectrum in 16 circles for 5G services. The company also buys more 4G spectrum in the three circles of Andhra Pradesh, Karnataka and Punjab.
The new Universal Bid adds an annual installment debt of Rs. 1,680 crore about the company.
VIL posted a consolidated loss narrowing the margin to Rs. 7,296.7 crore in the June quarter year-on-year, as the tariff increase has accelerated its realization. The telecom’s loss stands at Rs. 7,319.1 crore in the previous quarter.
VIL’s operating revenue increased to around Rs. 10,410 crore for the quarter ended 30 June 2022, an improvement of nearly 14% year-on-year.
Average Revenue Per User or ARPU – an important monitorable factor for telecom players – stands at Rs. 128 per subscriber during the quarter, compared to Rs. 104 in Q1 FY22. This represents a 23.4% improvement over the same period last year, thanks to the tax increase.
“Just to summarize that in terms of 4G pricing, I think there’s definitely a value-based opportunity that’s consistently being offered to consumers and how the first few price hikes have been absorbed seamlessly, I thought there was a chance to do it soon,” Takkar said.
He also said that investment in the company’s network has been affected due to liquidity issues.
VIL CFO Akshaya Moondra said the company has strategically bid for spectrum and its ongoing fundraising plans include calculating capital expenditures for 5G networks.
The heavily indebted company says there is positive momentum in its fundraising with promoters’ recent investment in the company.
At the end of the quarter from April to June 2022, VIL’s gross debt (excluding lease debt and including accrued but undue interest) stood at Rs. 1,99,080 crore, including deferred spectrum payment obligation of Rs. 1,16,600 crore, liabilities AGR of Rs. 67,270 crore is due to the government, and debt from banks and financial institutions Rs. 15,200 crore.
Moondra said the company has written off a lot of bank debt and the Department of Telecommunications (DoT) has returned a bank guarantee worth Rs. 17,000 crore.
“We’ve made a commitment to the bank that our exposure has been reduced. Looking at our external debt and EBITDA, we’re in a very comfortable position. There’s a pretty long time frame for that. government debt repayment. Banks understand this and based on discussions with them we can come to a conclusion in the near future. We will mainly take on new debt for investment,” he said.
Speaking of converting the interest into an equity allocation to the government, Moondra said the company confirmed an amount of Rs. 16,130 crore for DoT and final confirmation from the department on this is awaited.
The government is expected to receive about 33% of VIL’s shares once the conversion of interest into equity is confirmed.
