Vodafone Idea on Monday downplayed subscriber churn for the October-December 2021 quarter, saying it was a result of tariff hikes, which led to SIM consolidation, while keeping its 4G base growing. The company also expects to complete the fundraising this fiscal year.
“Typically, two or three things happen when the price goes up, one is that recharges are a bit slower over the course of a few days, and two is that we’re seeing a phenomenon of SIM consolidation…a lot of our subscriber losses can be attributed to The price went up,” Ravinder Takkar, managing director and chief executive officer of Vodafone Idea, said on the analyst call regarding the third-quarter results.
When asked if the tariff hike also affected consumer usage, Takkar said the impact was small, as prices were still very affordable. Vodafone Idea lost 5.8 million subscribers in 3Q22 (compared to 2.4 million in 2Q22), while the 4G subscriber base edged up to 117 million from 116.2 million in 2Q22. Vodafone Idea’s average revenue per user (Arpu) increased from Rs 109 in the previous quarter to Rs 115 in the October-December quarter due to price hikes.
The company expects the full impact of the price hikes to be seen in the fourth quarter. “The next quarter will have a big impact,” Takkar said. Regarding the inquiry of another price increase, Takkar said that it will definitely increase the price, but it has to look at the time, which may happen in 2022 or 2023.
“The last rate hike (November 2021) was almost two years later, so we certainly think the next rate hike is less than two years away,” he added. The executive also reiterated that the company expects Financing completed in fiscal year. It has been planning to raise Rs 25,000 crore for more than a year. Following the fundraising, the company’s capital expenditure will also trend upward as the company will focus on increasing 4G coverage.
The company expects to return a bank guarantee (BG) worth Rs 17,000 crore. It has received licensing fee-related BGs worth over Rs 1,000 crore from the Department of Telecommunications (DoT). The bulk of the BG, totalling Rs 15,000 crore, is related to spectrum and will be returned by the DoT shortly after completion of the formalities.
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