Tariff Hike Key to Sector Revival; ABG, Vodafone Committed: Vodafone Idea CEO Ravinder Takkar

On Monday, Vodafone Idea CEO Ravinder Takkar called its recent tariff hike a step in the right direction. However, he added that these changes are not enough for sector revival, stating the need of floor pricing.

Tariff Hike Necessary - Vodafone Idea CEO

At the Q1 earnings call, Takkar reassured the support of Kumar Mangalam Birla and ABG, saying, "he as well as Aditya Birla Group and the Vodafone group are committing to providing support and guidance to the company, in line with the stated positions of both the groups". He added, "we will thus continue to get the benefit of their experience and support".

Takkar discussed the recent tariff hikes, saying, "while these tariff interventions are steps in the right direction and will help in improving ARPU, such changes are not material enough to solve the structural issues that the industry is facing".

Takkar also informed that the company has been in talks with potential investors. Moreover, Vodafone Idea continues to engage with the regulator on floor pricing. Takkar called the same "critical and necessary" to improve the overall health of the industry.

"As mentioned by us, time and again, tariff hike remains a critical factor to revive the sector, and pricing structure has to change where operators have the ability to charge customers for incremental usage," he pointed out.

Takkar then expressed his disappointment at the SC's decision to scrap VI's AGR reassessment plea. He said, "needless to say we were disappointed by the verdict. We have recently filed a review petition in the SC clearly indicating that the intent is not for us to challenge the judgement of the court, but to seek corrections in demand due in manifest errors," Takkar said.

Existential Scrap at VIL

Vodafone Idea's financial woes have been well-documented over the past few weeks. Takkar's comments come on the backdrop of a weak Q1 performance by the telco.

The cash shortfall situation has worsened, as Goldman Sachs observed. The brokerage said that by April 2022, the telco could face a Rs 23,800 crore cash shortfall. Also, the telco's debt has widened to Rs 1,91,590 crore. This primarily consists of spectrum obligations of Rs 1,06,010 crore and AGR liability of Rs 62,180 crore due to the government.

However, in some positive, the telco managed to decrease its loss Y-o-Y to Rs 7,319 crore, against Rs 25,460 crore. But, sequentially, the loss has increased from Rs 6,981 crore the quarter before. In a worrying trend, the telco's operational revenue shrunk to Rs 9,152.3 crore from Rs 10,659.3 crore Y-o-Y.