Vodafone Idea in a 'Difficult Phase', Hope Govt Provides Support: Kapania

Vodafone Idea is going through a “difficult phase” and hopes the government will back its efforts to generate reasonable returns on its “massive” investments, new chairman Himanshu Kapania said.

Vodafone Idea Hoping for Govt Support

Kapania, in his first letter to the shareholders since taking charge of Vodafone Idea, said, “as the industry continues to remain under unsustainable financial duress, your company is hopeful that the government will provide the necessary support to address all structural issues faced by the sector". This letter formed a part of the annual report of the telco for the bygone fiscal.

He added, "your company with a history of providing 25 years of mobile services to the country is hopeful that the government will support its efforts to generate reasonable returns on their massive investments. Therefore, while the company awaits the government’s final decision, it will continue to remain focused on providing quality service to the customers and sustain intensity in the market".

The "government decision" Kapania mentioned referred to the imminent telecom relief package. Notably, this package can include moratoriums on AGR and spectrum payments, along with reduced SUC for telcos. The relief package is widely expected this week.

Implying the issues related with having a two-player telecom sector, Kapania added, "your company believes the government recognizes the criticality of the sector and the importance of retaining healthy competition amongst private sector operators".

Perilous Situation at Voda-Idea

Back in August, Kumar Mangalam Birla, also the chairman at Aditya Birla Group, resigned from his post at Vi. He did not cite any reasons. More crucially, that resignation came off the back of a letter becoming public, where he allegedly offered ABG's stake in Vodafone Idea to the government.

The ongoing AGR battle between the government and the telco has caused the majority of its issues. Kapania also has said that Vi was left "disappointed" with the Supreme Court's verdict. After the verdict, the telco had filed a review petition, which is pending in the Supreme Court. "This is a difficult phase for the Vodafone Idea family as well," Kapania said; he also highlighted the progress on the AGR battle.

Furthermore, according to Kapania, the operating environment during the FY21 remained "challenging". He said that the situation had spiraled into one of hyper competition and unsustainable pricing.

Kapania also detailed a roadmap, one where IoT and digital services will play a crucial role in getting revenues. The telco said if there are no tariff hikes, Vi has taken market initiatives to improve its ARPU. Incidentally, VI's ARPU stands at Rs 104, the lowest in the industry. Therefore, the telco will focus on enterprise business and digital revenue streams. It will seek out partnership with e-commerce platforms, NBFCs and mobile phone makers.