Vodafone Idea Plans Another Tariff Hike Amid Subscriber Losses

Vodafone Idea is contemplating yet another tariff hike, signaling its ongoing struggle with declining subscribers and revenue. Just weeks after a previous hike, the telco is eyeing another increase in tariffs in an effort to address its challenges.

CEO’s Statement

During the company’s earnings call, Vodafone Idea’s CEO, Ravinder Takkar, hinted at the possibility of another tariff hike in 2022. Takkar attributed the drop in subscribers to the previous tariff hike in November and SIM consolidation. Despite the decline, he expressed confidence in the pace of 4G customer additions.

Previous Tariff Hike

In November 2021, Vodafone Idea raised tariffs by up to ₹500 or 25% across its popular plans. However, the impact of this hike is yet to be reflected in the company’s average revenue per user (ARPU), which remains at ₹115, significantly lower than its competitors Airtel and Jio.

Future Tariff Hike Outlook

Takkar suggested that the interval between tariff hikes should be shorter, indicating the possibility of another increase in 2022 or 2023. The rationale behind this strategy is to expedite the integration of new prices into the market.

Financial Performance

Vodafone Idea’s financial indicators paint a bleak picture, with revenue, ARPU, and subscriber numbers all declining. The company experienced an 11% drop in revenue, primarily driven by the decrease in ARPU and subscriber losses.

Delayed Impact of Tariff Hikes

While the tariff hikes announced in November 2021 are expected to improve ARPU later this year, their full impact is yet to be realized. Despite the challenges, there are signs of improvement, with a declining trend in subscriber losses observed in recent months.

Positive Trends Amid Challenges

Sequentially, Vodafone Idea’s ARPU showed a notable improvement from ₹107 to ₹115, representing a 5% increase. Additionally, the absence of interconnect usage charges (IUC) in the comparison quarters enhances the comparability of these numbers.

As Vodafone Idea navigates through its financial challenges, the potential tariff hike reflects its efforts to stabilize its operations and improve its financial health in a highly competitive telecom market.