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Vodafone Idea analysts’ concall: Govt wants to see 3 private players & 1 public player, says CEO

Updated : November 15, 2019 05:34 PM IST

Vodafone Idea also laid out a plan to pay its debt, which as of the quarter ending September 30, 2019, stood at Rs 1.17 lakh crore

Management confirmed that it had extended the long stop date for the merger between Indus Towers and Bharti Infratel to Dec 24, 2019

A day after Vodafone Idea reported a net loss of Rs 50,921 crore, the company’s management addressed analysts to give a comprehensive perspective on the numbers, the impact of the AGR order and the way forward. In a frank and candid commentary to an analyst question on discussions with the government, the CEO Ravinder Takkar said that they have been engaging with the government even before the SC AGR verdict.

“We have been engaged with the government very positively even before the AGR case. Their response has been very constructive;” he said. “Government is aware of the tremendous stress faced by operators. They want the sector to be healthy and thriving and believe that it is an important contributor to the country. Government is clear that they want to see 3 private players and 1 public players in the sector;” he added.

ALSO READ: Relief for telecom likely as government mulls minimum price for calls, data

Takkar also said that he was aware that a Committee of Secretaries has been appointed to make comprehensive recommendations on relief for the sector. “We believe the committee has met several times and are close to making recommendations.”

Analysts also asked the management on the possibility of a floor price on data or voice tariffs being looked at. To this, the management referred to CNBC-TV18 newsbreak and said that while they can’t comment on the possibility of a floor price, there have been instances where this has been considered by some countries. But he agreed that if this were to be implemented it would help the sector. Referencing Jio, the management also added that the stress in the sector reaching its current levels was largely at the back of predatory pricing by Telecom operators.

Last month, the Supreme Court passed a verdict allowing the government to recover dues from telecom operators for adjusted gross revenue (AGR). The move is a massive blow for the incumbent players, especially Bharti Airtel & Vodafone Idea. In its Q2FY20 earnings, Vodafone Idea has accounted for Rs 27,610 crore for licence fee and a liability of Rs 16,540 crore for Spectrum Usage Charges up to September 30, 2019. This takes the total amount accounted by Vodafone Idea for the licence fee and SUC charge at Rs 44,150 crore.

The DoT released a circular earlier this week, instructing telecom operators to pay the amount in 3 months’ time as opposed to the 6 months’ time frame sought by telecom operators. Addressing a question on AGR, Vodafone Idea management confirmed that they were looking a filing a review petition or a curative petition that will go to a 5 judge bench.

“On AGR case we would like to see interest, penalties & interest on penalties be looked at. We have been asking for some kind of a payment plan for the principal AGR amount so that we can make the payment over a period of time;” said Takkar. He also added that since the government was the winner in the AGR case, providing relief in the AGR case of some sort, was very much in the hands of the government.

Vodafone Idea also laid out a plan to pay its debt, which as of the quarter ending September 30, 2019, stood at Rs 1.17 lakh crore. The management confirmed that it had extended the long stop date for the merger between Indus Towers and Bharti Infratel to December 24, 2019.

All necessary approvals for the merger of the two-tower players are in except that of DoT. Vodafone Idea will look at selling its 11.5 percent stake in Indus Towers once the merger is completed. Aside from that the management is also looking at selling stake in its 160,000-kilometre inter-city & intra-city fiber portfolio along with its data center business.

The management was also asked to comment on pricing pressure after Jio introduced 6p/min charges on off-net calls to other operators. To this, the management said that while Jio was charging customers, it was also balancing that by data vouchers so there was no major price or tariff increase coming from Jio. At the same time, he said that they are monitoring the situation and that they continue to remain at a premium in terms of pricing versus Jio.

For Q2FY20, Vodafone reported EBITDA of Rs 3,341 crore down by 9.5 percent versus Q1FY20 and its margins shrunk from 32.4 percent to 30.9 percent. It also reduced the capex guidance for the year from Rs 17 lakh crore to Rs 13 lakh crore. Its ARPU stood at Rs 107 vs 108 in the previous quarters whereas MOU was down 6.7 percent due to a reduction in incoming minutes.

Vodafone Idea analysts’ concall: Govt wants to see 3 private players & 1 public player, says CEO

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