In his address during the launch of Vodafone Idea Limited’s (Vi) annual report, Himanshu Kapania, chairman, Vi, said that the incremental tariff hikes are crucial to improving industry health as the sector operates at unsustainably low prices and average revenue per user (ARPU) remains lower than historical trends. According to Kapania, the increasing digital penetration and increasing content consumption, especially through video and social media usage and increasing e-commerce, is driving strong demand for high-speed mobile broadband connectivity for internet. He further mentioned that post successful completion of network integration exercise and realisation of merger synergies, the telco had undertaken a cost optimisation exercise and realized 90 per cent of the targeted Rs 40 billion annualised operating expenditure (opex) savings on a run rate basis in FY’22. Kapania believes that the incremental digital initiatives will improve revenue and profitability and subsequently strengthen the company’s overall competitive position and revenue in the longer run.
Meanwhile, the annual report released by the company noted that while the tariff interventions have helped arrest average revenue per user (ARPU) decline during the year, the industry still operates on unsustainably low tariffs. Further, as per the annual report, the ARPU levels remain lower in comparison to historic trends, despite the fact that the consumer gets much more value in terms of unlimited voice and daily data allowances, compared to five years ago.
Lastly, the annual report of the company advocates that the industry will have to further raise tariffs at regular intervals, which is essential for operators to generate reasonable returns on their capital employed and support future investments, including new technologies.
