Vodafone Idea welcomes staggered payment of AGR dues, but says tariff hike a must

New Delhi: Struggling telecom operator Vodafone Idea on Monday said that the Supreme Court giving 10 years to telcos to clear past dues is eventually a good outcome but stressed that mobile tariffs need to be raised to give sustainability and returns to companies.

At a virtual briefing on Monday, Ravinder Takkar, MD and CEO, Vodafone Idea Limited said the company, in the past, had not shied from raising tariffs, which are under forbearance but insisted that the regulator and the government should take a call on fixing a minimum floor price.

Last week, VIL board approved fund-raising plans of up to Rs 25,000 crore through a combination of equity and debt instruments, to keep the company afloat.

The upcoming fundraising will offer a lifeline to cash-strapped VIL, which has suffered massive losses, has been losing subscribers and Average Revenue Per User (ARPU), and faces outstanding Adjusted Gross revenue (AGR) dues of about Rs 50,000 crore.

Earlier this month, the Supreme Court allowed telecom operators to pay 10 per cent of total Adjusted Gross Revenue (AGR)-related dues this year, and rest of the payments in 10 instalments starting from next fiscal year.

"Besides the 10 years part, which was an important element of the judgement, there is also an initial payment which was 10 per cent which we have already paid, of the amounts that have been given by the Department of Telecommunications (DoT), so in fact our first payment based on the outcome of the judgement is going to be in March 2022 of the first of the 10 year installments, which I think is eventually a good outcome," Takkar said.

He termed the recent SC order for staggered payment of telcos' dues as an "important step" and said "it will be something that will be very useful as we plan our journey for the next 10 years." "We are very thankful to the court for allowing us payments over this 10-year period," he added.

On the issue of tariff hikes, Takkar said the entire industry is of the view that tariffs in the Indian market are "unsustainable" and companies are selling below cost, something "evident from the Profit and Loss (P&L statements) and balance sheets of companies".

Citing the massive growth in data and voice usage over the past years, he said tariffs must go up in the short term.

"Consumers are ready to pay additional tariffs - which is something they were paying earlier - to keep the quality of service up. We believe tariffs have to go up at least in the short term... getting them in the first steps up to Rs 200 is an important step and eventually the Rs 300 range," he said.

The telecom regulator's floor price consultation is a recognition of the importance of looking at tariff increase or certainly floor prices in the industry, he added.