The country’s only financially ailing telecom company Vodafone Idea has found itself in a stifling situation owing to its extremely low tariffs and the dues which it owes to banks and the government. To add to its woes, Vodafone Idea has acquired spectrum in March for which payment remains to be paid. Vodafone Idea is also the only telecom operator which is loss-making in the country. The government’s position on this entire issue has been to favour the telecom industry in general and not just one telecom operator. This means that any support if it comes from the centre will favour every operator and not just one.
Vodafone Idea Unable to Raise Tariffs by Itself
Vodafone Idea Managing Director, Ravinder Takkar, has already pointed out that the company cannot by itself raise tariffs because of the extremely competitive situation that prevails in the market right now. On the other hand, Bharti Airtel and Reliance Jio seem to be in no mood of raising tariffs. Even though they might be suffering under the burden of low ARPU, but their comparatively better off financial standing has allowed them enough of a runway to sustain these rates.
The same is not the case for Vodafone Idea. To speak about the finances of Vodafone Idea, an ET report has pointed out that the telecom company owes Rs 8,292 crore to the centre for its auction purchases earlier this year. It has also announced a Rs 25,000-crore fundraising plan with a mix of equity and debt.
Government to Seek TRAI Recommendations
The government through a DoT official has expressed its standing saying that it would help the industry as a whole and not just one telecom operator. While Vodafone Idea has been raising concerns about some relief and a one-year payment moratorium. The Telecom Department has also been in favour of a four-player industry structure with three private players and one public telco. Regarding this situation, the DoT will now approach TRAI and seek its views on the matter. It has also remarked that it will have to see the cost structure of other telcos as well to better understand the situation of Vodafone Idea.
