Vi (previously Vodafone Idea) is reportedly planning to increase its tariffs by 15-20 percent by the end of this year or early 2021 in order to increase its revenue. Vi has been in a tough spot in the country with a mountain of debt and has also been losing millions of customers to rival telcos.
As per industry analysts, the telco will need a trio of the tariff hike, fundraising and government support to survive in the country. Vi is reportedly raising up to Rs 25,000 crore through a mix of debt and equity, and now it seems to be all set to hike its rates in the country as well. Let’s take a look at all other details of the new development.
Vi may hike tariffs to increase revenue
The latest report comes from ET Telecom quoting sources familiar to the matter. According to the report, while telcos are waiting for TRAI to set floor prices, Vi might jump ahead and increase the tariffs as soon as December 2020 or early 2021. Additionally, the sources revealed that there have been talks internally to hike tariffs by as much as 25 percent but that may be difficult to do in one go. The impending hike of 15-20 percent is also likely to be implemented in phases.
According to the report, the telco needs to raise tariffs in order to pay off its debts and also invest in improving its 4G network to match rivals and retain subscribers. However, the upcoming increase in tariff might result in more subscribers loss for the telco unless Airtel and Jio hike their rates as well. Notably, Vi lost around 8 million users in the July-September quarter as per reports.
At Vi’s second-quarter results meeting, MD Ravinder Takkar mentioned that the current tariff rates are unsustainable and Vi will not shy away from being the first to increase the rate. ET Telecom reports that Bharti Airtel CEO Gopal Vittal agrees that the current tariffs are unsustainable and while Airtel will not be the first one to hike tariffs, it will instantly follow suit if competing brands do so.
As of now, there is no indication whether Jio will also hike tariff considering it witnessed its lowest-ever user acquisition according to TRAI in August 2020.