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.

vodafone-idea-unsustainable-market

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.

Read more on:

80
Leave a Reply

avatar
Photo and Image Files
 
 
 
37 Comment threads
43 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
44 Comment authors
Magesh BabuNikhil Mumbai-PunePriyanshxyzAz_karnataka Recent comment authors
newest oldest most voted
Magesh Babu
Magesh Babu

(Sic) ” Vodafone Idea is to be blamed if a monopoly or duopoly situation arises in India, and not Jio! If they didn’t invest in latest technologies (e.g. VoLTE, CA, MIMO) to save costs and improve user experience and provide competitive tariffs, then who else is to be blamed?

Leave network and prices, all their plans are unethical with non-transparent hidden terms and conditions and complicated structure… Many customers dumped them because if this, along with worst Network… Is Jio to be blamed for their incompetence and unethical character? “

Magesh Babu
Magesh Babu

Balesh is the worst choice to lead Vodafone Idea. Mr.Birla should have strongly insisted on an Idea candidate for CEO! These Stone age mindset Vodafone guys will destroy Vodafone Idea. Feeling sad for Idea.

Recent Posts

Vodafone Idea and Bharti Airtel Likely to Skip 5G Spectrum Auction if it Happens This Year

Telecom operators, Bharti Airtel and Vodafone Idea, will likely skip the 5G spectrum auction if the government decides to held...

NCLAT Dismisses Contempt Petitions Filed Against RCom Chairman Anil Ambani

The NCLAT on Tuesday dismissed contempt petitions filed against Reliance Group Chairman Anil Ambani and other officials by minority shareholders,...

Dish TV Multi TV Policy Outlines Rs 50 NCF Charges to Be Paid for Every Secondary Connection

Dish TV, along with D2h, is currently the leading DTH operator in India when it comes to the subscriber base....