The Indian telecom industry desperately needs the help of tariff hikes, believes Kumar Mangalam Birla, chairman of Vi. Birla said in the Vi Annual General Meeting on Wednesday that India’s telecom sector depends on higher tariff rates for its future growth. The Indian telecom industry was among the worst economically hit industries during the COVID19 pandemic and received another setback in the form of AGR verdict. The telcos plea for a reassessment of the AGR dues was earlier denied by the Supreme Court. However, the apex court in early September allowed the operators to clear the dues in the next 10 years.
Higher Tariff Rates May Around the Corner for Vi Customers
Birla believes that even after the tariff hikes which took place last December, it is not sufficient for the growth of the telecom operator. Vi is in need of a lot of cash and the telco is going to raise up to Rs 25,000 crore via debt and equity very soon.
But in order to grow in the long-term, Vi needs to generate higher Average Revenue Per User (ARPU). Keeping this reason in its pocket, Vi might increase the tariff rates for its offerings very soon. The telco has to pay more than Rs 50,000 crore to the government in the form of AGR dues in the next 10 years. For this, ample cash flow is required to keep the company profitable, hence the requirement of tariff hikes.
Vi recently announced that it is upgrading all of its 3G customers in select telecom circles to 4G network. It has been said that the switch to the 4G network will happen in a phased manner. The operator also completed the world’s largest network integration and has named it GIGAnet. It is said that the recent developments including the switch to 4G networks will help Vi to increase its ARPU and profitability in the long-term.
Vi has also struck a sponsorship deal with the BCCI for the Dream 11 Indian Premier League (IPL). The Indian telecom operators have not officially confirmed whether the tariff hike will take place or not, but the analysts have said that the tariff hikes are required for the industry. Sunil Mittal, Chairman of Bharti Airtel also believes that a tariff hike is needed to help the telecom industry grow.