Distress Call: Vodafone Idea again presses for tariff floor price

The telco is in search of a one-year moratorium on cost of spectrum instalment of over Rs 8,200 crore, due in April 2022, in keeping with studies.

Unable to unilaterally increase tariffs, which is affecting its fund-raising plans, Vodafone Idea has as soon as once more sought regulatory intervention for fixing flooring value for telecom tariffs. “The most important subject that may be a drawback on this sector in the present day is the pricing which is way decrease than it must be. A tariff hike is completely wanted. We consider that flooring pricing stays the perfect and probably the most most popular approach to repair this subject,” Ravinder Takkar, managing director and CEO, VIL instructed analysts in a post-earnings name on Friday.

He stated that each one trade representations made to the Telecom Regulatory Authority of India (Trai) have highlighted that {that a} flooring pricing is required for telecom tariffs and outcomes of the session are awaited.

Nevertheless, it stays to be seen if the federal government and the regulator are once more eager to pursue this proposal. As of final 12 months, Trai is known to have dropped the proposal of putting in flooring costs for each knowledge and voice tariffs, because it felt that the well being of the telecom operators had improved publish December 2019 tariff hikes and the Supreme Court docket permitting them to pay their adjusted gross income (AGR) dues in instalments over a 10-year interval.

Vodafone Concept, which badly must hike tariffs as soon as once more, has not been ready to take action as opponents, Reliance Jio and Bharti Airtel, are usually not doing so, and unilaterally, mountain climbing tariffs can harm it greater than bringing any features. On its half, Bharti has additionally stated that tariffs must go up however it can not accomplish that except Jio does the identical as its tariffs are at a premium to that of Jio’s.

Takkar additional stated that given the pricing state of affairs and the resultant stress on the complete telecom trade, the corporate has additionally written to the division of telecommunications (DoT) to additional lengthen the moratorium on spectrum funds. The telco is in search of a one-year moratorium on cost of spectrum instalment of over Rs 8,200 crore, due in April 2022, in keeping with studies.

He stated that the two-year moratorium was granted by the federal government as a result of there was stress within the trade and there have been challenges which weren’t permitting operators to make these spectrum funds. He added that whereas a few of these points just like the AGR have been addressed to some extent, different vital points just like the pricing proceed to stay. “Except these huge components are addressed, in some methods the stress will proceed. I believe it is just affordable to say that the federal government must present an extension to the moratorium,” he stated.

VIL, which has a gross debt of Rs 1.8 lakh crore has seen its working metrics not simply stay the bottom within the trade, but in addition deteriorate repeatedly in comparison with earlier quarters. In keeping with studies, the corporate’s lenders have sought the finance ministry’s intervention to supply some aid to the beleaguered telco. Takkar declined to touch upon it.

Nevertheless, responding to an analyst question on the hurdles that VIL faces in concluding the much-needed fund-raising, he stated, “The most important hurdle is that the general trade is beneath stress as a result of pricing state of affairs. As quickly because the pricing improves, this creates vital and long-term confidence not solely within the trade gamers however general begins to point out within the constructive returns for the trade. And that I believe can drive vital quantity of investments not solely from new but in addition present buyers into the enterprise.”

In September final 12 months, VIL had stated that it’s going to increase funds to the tune of Rs 25,000 crore, which might allow it to fulfill its cost of AGR dues’ instalments and that of deferred spectrum. Nevertheless, regardless of being in discussions with a number of buyers over the past 10 months, the corporate has not been capable of shut it. “We’re totally engaged with buyers. There continues to be curiosity, and we are going to announce one thing as quickly as the corporate is ready. No deadline has been set, and I can not discuss any timelines,” he instructed analysts.

VIL has once more posted a giant lack of Rs 7,023 crore throughout the January-March quarter, which widened considerably in comparison with the earlier quarter’s Rs 4,540 crore.