Unsustainable Telecom Market is Damaging Digital India Initiative: Vodafone Idea

By November 22nd, 2018 AT 5:45 PM

The largest telco by subscribers Vodafone Idea said the market is “unsustainable” due to aggressive competition and warned that it’s detrimental to the government’s flagship initiatives like Digital India. In his first interaction after the merger of the two companies, chief executive Balesh Sharma said on Thursday to reporters of PTI that all the three operators are burning cash and no one can expect them to invest in such a situation.

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Blaming the low ARPU or average revenue per user all the three operators, reported massive drop in ARPU in the range of Rs 131 for Jio and a low Rs 100 for Airtel) for the cash flow troubles that the domestic telcos face and the resultant underinvestment in the network, he said against this in the neighbouring China the higher Apru makes it comfortable for operators there to invest for the future.

He also said there is no clarity on when the pricing situation will improve either in the domestic market. In other news, Vodafone Idea plans to invest Rs 27,000 crore in 2019-20, supported by savings of around Rs 14,000 crore that it expects to come from synergising operations of merged entities, according to a company’s document. The debt-ridden company has advanced its target date to complete integration of Vodafone and Idea Cellular business to the financial year 2021 from fiscal 2023.

“Capex guidance of Rs 270 billion in the financial year 2019-20 supported by existing co-located equipment to be redeployed, spectrum consolidation, capex avoidance and efficiencies,” the document said.

The company expects to advance of synergy target by two years will help it improve cash flow to the tune of Rs 8,400 crore and re-deployment of co-located equipment of Vodafone and Idea will help it save Rs 6,200 crore. The company has chalked out deleveraging plan by raising capital and sell 11.15% stake in Indus Towers.

Vodafone Idea estimates that sale of 11.15% stake in Indus Towers can realise Rs 5,000 crore, which it will use in lowering debt. The merged entity’s gross debt as on September 30, 2018, stood at Rs 1,26,100 crore. Around 79% debt on the company is net dues for spectrum payment.

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