Vodafone Idea Limited (VIL), the third-largest telecom operator in the country, recently posted results for Q4 FY25. The results were better than what many had expected in some ways. However, today, we will talk about one of the major pricing themes that most of the industry leaders are talking about. We all have heard time and again that the industry tariffs are low in India and telecom operators can't generate good ROCE (return on capital employed). Something similar was said by Vi CEO during the recent earnings call. Here's what he said.
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Vodafone Idea CEO on Tariff Hikes and New Pricing Model
India has one of the lowest ARPUs (average revenue per user) figures in the world. This was echoed by many of the industry leaders recently. Here's what Moondra, CEO of Vi said, "India has one of the lowest ARPUs in the world making it challenging for telcos to sustain investment and innovation." But things didn't end here.
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Moondra hinted that the current tariff structure is not optimal for the companies to make money. On this, he said, "to ensure a fair return on significant investments and support future capital expenditure in the telecom industry, further tariff increases are essential. Additionally, the
industry needs to move towards a pricing model where heavy data users contribute more proportionally to their higher usage, than the current pricing structure where incremental data usage comes at an extremely low unsustainable price."
This structure is up for discussion and views on it will definitely be harsh from the customres. What's interesting is that this has been said by Airtel in the past as well. The more the user consumes, the higher he/she relatively pays for each additional GB of data they consume. When is this new structure coming? Not any time soon.
