Tariff Rates Are Still Unsustainably Low: Vodafone Idea

The company is said to be focusing on “various strategic initiatives” to improve revenues and profitability

Vodafone Idea on Monday said that the existing tariff prices in the telecom sector is “still unsustainably low” despite the operator along with its rivals increasing the tariffs in December 2019. The company highlighted the tariff rates in its annual report for the period ended March 31, 2020 that Vodafone Idea released on Monday. Vodafone Idea said that the operating environment remained challenging throughout the 2020 financial year largely due to the “unsustainable pricing and hyper competition.” Further, the company said that the adjusted gross revenue (AGR) verdict delivered by the Supreme Court “also added to the financial woes of telecom operators.”

Telecom Tariffs Are “Still Very Low” Despite Tariff Hikes in December 2019

Kumar Mangalam Birla, chairman of Vodafone Idea, said in the letter to shareholders that the existing tariffs are “still very low” despite its hike in December 2019.

“Tariffs are still very low and therefore pricing revival is critical for the long-term growth of the sector,” Birla said.

However, Birla added that the increase in the content consumption is “driving strong data demand” and that it will provide a “significant opportunity” to all the industry operators when the “pricing revives.” Crucially, Birla said that the Vodafone Idea with its “largest spectrum portfolio” along with its network investments in the form of network sites and optical fiber is “very well positioned to be benefited in the evolving market place.”

Birla said that Vodafone Idea “continues to focus on driving 4G penetration to increase” average revenue per user (ARPU).

“The pricing action coupled with increasing migration to unlimited/ 4G has led to improvement in ARPU,” Vodafone Idea said in its annual report. “While the price hike is a step in the right direction, tariffs are still unsustainably low despite offering much higher value compared to past.”

Vodafone Focusing on Multiple Initiatives to Improve Profitability and Revenues

Vodafone Idea said that it is focusing on “various strategic initiatives” such as rapid integration between Vodafone and Idea networks to improve revenue and profitability along with strengthening its position in the market.

Further, the company said that the strategic initiatives include expansion of its 4G coverage and data capacity in its “major markets.” The company also highlighted that it has consolidated its postpaid services into a single Vodafone Red brand and that its RedX plan has “excellent industry first features to attract high ARPU” users.

Born in India, Yogesh loves to travel and has lived in multiple countries including New Zealand and Canada. His bylines can be found on various newspapers and blogs throughout the world, including Vancouver Sun, Surrey Now-Leader, Daily Hive , Investing News Network and Rach F1.

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