15
Vodafone Idea’s strategy to retain its pole position in the industry revolves around simplified tariff plans, faster integration and strengthening its balance sheet, its chief executive officer said, adding that current “unsustainable” pricing “will repair,” given the consolidation in the sector.
Balesh Sharma told reporters on Thursday the the company will invest in key and profitable areas, focus on controlling costs in non-priority ones, reduce number of price plans and maintain a minimum low value recharge for subscribers, so all come under a billing cycle in a bid to raise average revenue per user (ARPU).
He added that the company would focus on expanding 4G at this “juncture” as India is not yet 5G ready.
Vodafone Idea, with 422 million customers, also aims to use big data and analytics to improve ARPU, a key industry parameter that has plunged since Reliance Jio Infocomm’s entry in September 2016, which triggered a brutal price war.
Vodafone Idea stock closed down 7.4% to Rs 41.10 on the BSE Thursday.
“Industry ARPU has gone down from already low level of $2.6 about two years ago to $1.4.
This is unsustainable,” Sharma said.
China has an ARPU of $8.4.
Sharma said the industry is bleeding but is hopeful prices will “repair materially” on consolidation.
Sharma’s comments came on a day Vodafone Idea chairman Kumar Mangalam Birla again met telecom secretary Aruna Sundararajan.
Birla had recently met senior government officials as well, to discuss severe cash crunch in the sector and seek a deferral on some spectrumrelated payments due in March.
Vodafone Idea, which reported its first quarterly results last week, clocked an ARPU of Rs 88 compared with Bharti Airtel’s Rs 101 and Jio’s Rs 131.
It posted a net loss of Rs 4,974 crore with operating margin of 8.1% and a net debt of Rs 112,500 crore.
Sharma said it wasn’t just Vodafone Idea but the whole industry that was suffering.
He expects better times in the hope that customers who paid high tariffs for fewer services won’t mind paying a bit more in future for better services.
The chief executive, however, clarified that Vodafone Idea has no plans to raise tariffs as of now.
“Where in the world of economics will you give away a product below price when you have unlimited demand and limited supply (I am) very confident prices will repair materially,” Sharma said, adding that after consolidation, all operators are cash negative.
“How long can one keep putting in cash, be negative in cashhow will funding happen”
The telco, which recently announced its plan to raise Rs 25,000 crore via equity, has chalked out a capex plan of Rs 33,200 crore for FY19 and FY20, including Rs 27,000 crore of fresh capex and Rs 6,200 crore drawn from synergies largely due to network integration for expanding 4G network to protect its turf against erstwhile market leader Bharti Airtel and Jio.
The operator said it will concentrate on expansion of 4G, and plans to increase its coverage to over 80% of India's population by March 2020, from the current 50%.
The company has been on several cost rationalisation measures since inception and Sharma said the hiring freeze was one such initiative.
It will continue to build on the strength of both its brands, Vodafone and Idea, he said.
In an investors’ meet on Wednesday Vodafone Idea said integration of the two telcos and their respective networks is moving ahead of plan and the company will be able to unlock annual synergies worth Rs 14,000 crore by FY21, compared with the earlier estimated FY23.
The telco, like its rival Airtel, will not subsidise handsets but continue to offer bundled offers with multiple handset manufacturers to bring down smartphone price points, the CEO said.
Stock Market
Vodafone Idea aims to be simpler, faster, stronger
Download Android App
Share in 
FullScreen CheckVideos
| Unlimited Portal Access + Monthly Magazine - 12 issues-Publication from Jan 2021 |
Buy Our Merchandise (Peace Series)
- Details
- Category: Stock Market
21