Vodafone Idea says another tariff hike is coming even as it continues to lose subscribers

• All the red signs are blaring at Vodafone Idea, but the telco says that a second tariff hike could be coming this year.
  
• The company’s CEO Ravinder Takkar noted that it won’t wait for two years to raise tariffs again.
  
• Vodafone Idea reported ballooning losses, declining revenue, subscriber and ARPU numbers during the December 2020 quarter.
  

Merely a few weeks after a tariff hike, Vodafone Idea says another one could be coming soon as the struggling telco looks to battle dwindling subscribers and dipping revenue.

“We would expect that it’s possible that there could be another price hike in 2022, but certainly at some point the price hike will take place,” said Vodafone Idea’s chief executive officer Ravinder Takkar during the company’s earnings call.

Interestingly, Takkar said that the drop in subscribers was due to the tariff hike in November and SIM consolidation. He also said there is “no concern regarding the 4G customer addition pace and the drop in subscribers.”

To recall, Vodafone Idea hiked tariffs by up to ₹500, or 25%, across all of its popular plans. While the hike is yet to reflect in the company’s average revenue per user, it is still languishing at ₹115, while its rivals Airtel and Jio are both sailing above ₹150 levels.

“The last one was almost 2 years earlier, which I believe is a bit long. We certainly would expect less than two years, but in 2022 we will have to see how quickly these prices get embedded. Probably, it could be 2023 as well,” said Takkar, laying down the rationale for the tariff hike.

Revenue, ARPU, subscribers down, losses widen

All the alarms have gone off and the sirens are blaring at Vodafone Idea as the telco continued to hemorrhage subscribers in the December quarter. Revenue and average revenue per user (ARPU) were down, too, and losses continued to mount.

Vodafone Idea’s quarter in numbers

Source: Company reports

The decline in ARPU combined with a steep decline in the subscriber numbers resulted in a 11% fall in the company’s revenue.

Tariff hikes to reflect in ARPU later this year

The tariff hikes announced by the telco in November 2021 will take a while to reflect in the company’s ARPU, according to Takkar.

However, there may yet be a silver lining in the dark clouds here – there’s a declining trend in Vodafone Idea’s subscriber losses. According to the telecom regulator’s (TRAI) subscriber data, Vodafone Idea lost over 5.6 million subscribers in October and November 2020. This is down to under 3 million in the same period in 2021. TRAI is yet to release data for December 2021.

Apart from this, on a sequential basis, the company’s ARPU improved notably by over 5% to ₹115 from ₹107 in the September quarter. It is worth noting that the IUC (interconnect usage charges) regime was not present in both these quarters, which makes the numbers comparable.

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