Vodafone Idea CEO Says Tariff Structure Needs to Change

Vodafone Idea Limited (VIL) recently hiked the tariffs along with the other private telecom operators in the country. Now, the telco’s CEO has said that the tariff structure needs to change in India. It is worth noting that Airtel’s CEO, Gopal Vittal also made a similar comment. Akshaya Moondra, CEO of Vodafone Idea Limited, said that customers who consume more have to pay more. Since Airtel and Vi are backing this structure, it is only Jio that has to agree as well. Once that happens, the new structure might become the reality for the sector, of course, if TRAI (Telecom Regulatory Authority of India) doesn’t interfere.

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Vi’s CEO said that the recent hike saw the base tariffs going up in price, however, in the future the base tariffs can’t be increased further. The structure needs to be such where the users who are consuming more data will have to pay more money for it. After the implementation of the tariff hike, Vi’s average revenue per user (ARPU) figure went up from Rs 154 to Rs 166 QoQ. The full effect of the tariff hike will be seen in the coming quarters on ARPU and the overall revenues, Moondra said.

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Vi’s ARPU is still quite behind when compared with the likes of Reliance Jio and Bharti Airtel. Airtel reported its ARPU at Rs 233 while Jio’s was Rs 195.1. This new structure would allow the telecom operators in boosting their revenue levels and ARPU. Both Airtel and Vodafone Idea have mentioned now that the tariffs need further revision for improving the health of the sector. Airtel’s CEO said that their ROCE (return on capital employed) was 11%, while for the industry on average it is at a lower figure. This has to improve, and it will only happen if the telcos are able to earn more from their customers.

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