Will Vodafone Idea Go for Tariff Hike Again?

Vodafone Idea might soon go for tariff hikes, but this time, instead of hiking up the prices for prepaid services, the telco might increase the price of postpaid plans. Analysts believe that the telcos are only hurting their business if they don’t move ahead with the postpaid tariff hike.

Highlights

  • Vodafone Idea (Vi) requires money from every end be it tariff hikes, fund raise, or loans.
  • Vodafone Idea might soon go for tariff hikes, but this time, instead of hiking up the prices for prepaid services, the telco might increase the price of postpaid plans.
  • Motilal Oswal, through a recent report has already highlighted that the telco needs to arrest the subscriber churn rate.

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Vodafone Idea

Vodafone Idea (Vi) requires money from every end, be it tariff hikes, fundraise, or loans. While the telco’s debt has been effectively reduced by converting a significant part of statutory dues into equity for the government, there’s still the question of money required for 5G rollout, Rs 1.9 billion debt on the books, and the 4G network expansion.

The telco has been losing customers in a bunch every quarter that goes by, and analysts say the primary reason behind that is the incapability of the telco to invest in its networks aggressively. So will Vodafone Idea go for tariff hikes again? It might, and here’s what you should know.

Vodafone Idea Might Increase Tariffs Soon

Vodafone Idea might soon go for tariff hikes, but this time, instead of hiking up the prices for prepaid services, the telco might increase the price of postpaid plans. Analysts believe that the telcos are only hurting their business if they don’t move ahead with the postpaid tariff hike.

Since there is a very short percentage of the population that uses postpaid services, the postpaid tariff hike might not increase overall revenues by a huge margin; it will still make some difference.

Motilal Oswal, through a recent report, has already highlighted that the telco needs to arrest the subscriber churn rate. To do that, the telco needs money to invest in networks.

According to Motilal Oswal, Vodafone Idea needs an average revenue per user (ARPU) jump of at least 1.9x to reach a self-sustainable level, and for that, a tariff hike is required. The revenues of the telcos need to jump by at least 3x from now. If this doesn’t happen, regardless of all the help, Vodafone Idea might find it very hard to stay afloat in the long term. Even the government will now be looking to tariff hikes to ensure that its equity in the company is worth something at the end of the day.

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