Vodafone Idea MD & CEO Ravinder Takkar on Monday mentioned the enterprise would not wait for other telcos to raise tariffs but would do so when the time was ideal. The telco confirmed it is engaged with investors to raise funds to the tune of Rs 25,000 crore, even though no timeline was indicated.
Tariff hikes stay the important to enhancing the sector’s overall health, Takkar told analysts, adding all players acknowledge services are becoming sold beneath expense and that the returns are dismal. Tariffs charged by Bharti Airtel and Vodafone Idea are about 15-20% greater than these of Reliance Jio, prompting Bharti to keep place in order to keep competitive, till Jio raises them.
Related News
-
Stocks in concentrate: Jet Airways, Bharti Airtel, Vodafone Idea, BPCL, ONGC, DHFL, amongst other people in news
-
Stocks in concentrate: Bharti Airtel, Vodafone Idea, Titan, Eicher Motors, Tata Steel, Future Retail
-
Spectrum auctions may well be a no-show: Telcos anticipated to do minimum shopping for, leaving about 60% spectrum unsold
The 3 players final raised tariffs in December 2019.
Analysts keep Vodafone Idea is extremely leveraged and also owes government the most adjusted gross revenues. Further, its income development, subscriber addition, typical income per user as nicely as other important functionality indicators examine incredibly poorly with these of Bharti Airtel and Jio. As such, it would want to raise tariffs very sharply, which could possibly be tricky to do in one go.
For instance, Vodafone’s Q3FY21 revenues at Rs 10,894 crore had been up only 1% q-o-q, compared with increases of 7% and 6% for Bhartiand Jio, respectively. Its Arpu in the December 2020quarter was Rs 121 compared with Rs 166 for Bharti and Jio’s Rs 151. Vodafone’s net subscriber loss for the duration of the quarter narrowed q-o-q from 8 million to 2 million, though Bharti’s net addition stood at 14 million and Jio’s at 5 million.
Goldman Sachs analysts wrote on Monday Vi would have adequate liquidity to meet scheduled payments till finish CY21. “However, between December 2021 and April 2022, Vodafone Idea has about Rs 21,500 crore of dues payable (debt, AGR and spectrum), and without a tariff hike, our estimates show a capital shortfall of Rs 20,000 crore for the company during this period,” they opined.
The analysts pointed out that because most of these dues are recurring in nature, a one-time capital raise would not be a sustainable remedy to Vi’s balance sheet tension. “We estimate the company’s Ebitda would need to be 4x vs December quarter levels for Vodafone Idea to be FCF neutral; said differently, its Arpu would need to be higher by Rs 105, or 1.9x of current levels. We note that a rise in Arpu can only be gradual, and thus for Vodafone Idea to get even close to the required 1.9x levels, the process of increasing tariffs would need to start in the immediate future,” they mentioned .
“It requires a tariff hike soon to boost operational cashflow,” analysts at ICICI Securities wrote.
Takkar denied fund-raising had been delayed added there is interest amongst investors.“I don’t believe that it is taking a lot of time. There is interest in various participants in helping us in our fund-raising,” he mentioned. Vodafone Idea’s board had in September 2020 authorized a fund-raising strategy to the tune of Rs 25,000 crore via share sale and debt.