DELHI, NEW DELHI: As India’s third-largest telecom seeks to hit average revenue per user (Arpu) levels of 350-400 over the next three to five years, Vodafone Idea Ltd’s chief executive officer and managing director Ravinder Takkar stated that the company will not hesitate to lead the next round of pricing hikes.
In an interview, Takkar stated that current Arpu levels are significantly lower than what they should be, taking into account inflation since 2016.
While telecom services have become vital, he claims that the share of user wallet has shrunk, making the case for increased prices even stronger. In an interview, Takkar stated that current Arpu levels are significantly below what they should be, taking into account inflation since 2016.
While telecom services have become vital, he claims that the share of customer wallet has shrunk, justifying higher tariffs. “In 2016, industry Arpu was 200-205, which is roughly 350-400 in today’s money terms.
However, telecom’s percentage of a consumer’s wallet spend has decreased to around $150, which is 50-60% smaller in today’s money than it would have been in 2016.
While telecom services were vital back then, they are even more important now, so there’s no reason why we can’t be where we were in 2016,” Takkar added.
He went on to say that the carrier’s short-term goal will be to raise Arpu to 200, then to 250, and finally to 300, which will give a satisfactory return on capital invested, a critical indicator that investors consider when making investments. “I’m always willing to take the lead” (tariff increase).
I’ve done it before, and if I believe it’s in the best interests of the company, I’d gladly lead another price hike,” Takkar said.
Despite the fact that Vodafone Idea’s Arpu has increased to 124 as of March 2022, it still behind Bharti Airtel, which has the highest Arpu of 178, and market leader Reliance Jio, which has an Arpu of 168.
The company’s plans to raise more capital of approximately 20,000 crore from external investors, evenly split between loan and equity, were nearing completion, according to the top executive, and their completion may lead to the promoters putting in more equity.
“They’ve put in Rs. 4,500 crore, which I believe has been quite beneficial.” It sets the stage for more investors to join in, as well as the possibility of even more promoter equity coming in. “Takkar explained. In FY22, the Aditya Birla Group and Vodafone Group PLC invested Rs 4,500 crore in Vodafone Idea, increasing the promoter holding in the Indian company.
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