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5G Should Be Priced at Premium to 4G With More Data, Overall Tariffs Expected to Rise, Vodafone Idea MD Says

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Debt-ridden Vodafone Idea expects 5G to be priced at a premium with more data bundled with plans compared to 4G services at present, a top company official said on Thursday. Vodafone Idea (VIL) Managing Director and Chief Executive Officer Ravinder Takkar, during an earnings call, said the company has spent a significant amount in acquiring spectrum in the recently-held auctions which calls for a need to charge premium for 5G services.

It expects overall tariff for mobile phone services to go up by the year-end.

“Given the fact that a fair amount of money has been spent on spectrum, we believe that 5G should be priced at a premium to 4G. You can price it at a premium, but of course within that premium you could have a situation where a number of gigabytes that you get are more because you are consuming potentially more, given the extra bandwidth that you get in 5G,” Takkar said.

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He added that the increase in data consumption on the 5G network will depend on use cases that are developed and adopted by consumers.

Vodafone Idea acquired spectrum worth Rs. 18,800 crore which includes radiowaves in the mid band (3300 MHz band) in 17 priority circles and spectrum in 26 GHz band in 16 circles for 5G services. The company also acquired additional 4G spectrum in three circles of Andhra Pradesh, Karnataka and Punjab.

The fresh spectrum bid adds an annual installment liability of Rs. 1,680 crore on the company.

VIL has posted marginal narrowing of its consolidated loss to Rs. 7,296.7 crore for the June quarter compared to the year-ago period, as tariff hikes boosted its realisations. The telco’s loss stood at Rs. 7,319.1 crore in the year-ago quarter.

VIL’s revenue from operations grew to about Rs. 10,410 crore in the quarter ended June 30, 2022, improving nearly 14 per cent from the year-ago period.

Its Average Revenue Per User or ARPU — a key monitorable for telecom players — stood at Rs. 128 per subscriber for the quarter, compared to Rs. 104 in Q1 FY22. This represented an improvement of 23.4 per cent year-on-year, helped by tariff hikes.

“Just to summarise that on the 4G pricing, I think there is certainly an opportunity based on the value that has been continuously provided to the consumers and how the first few price increases have been absorbed in a seamless manner, I think there’s an opportunity to do that soon,” Takkar said.

He also said the investment in the company’s network has been impacted due to liquidity issues.

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VIL’s Chief Financial Officer Akshaya Moondra said the company has strategically placed bids for spectrum and its ongoing fundraising plans include capital expenditure calculation for the 5G network.

The debt-ridden firm said there is positive momentum in its fundraising exercise with promoters’ recent investment in the company.

At the end of the April-June 2022 quarter, VIL’s total gross debt (excluding lease liabilities and including interest accrued but not due) stood at Rs. 1,99,080 crore, comprising of deferred spectrum payment obligations of Rs. 1,16,600 crore, AGR liabilities of Rs. 67,270 crore that are due to the government, and debt from banks and financial institutions of Rs. 15,200 crore.

Moondra said the company has cleared a lot of bank debt and the Department of Telecom (DoT) has returned a bank guarantee worth Rs. 17,000 crore.

“We are engaged with the bank that our exposure has come down. Look at our external debt and EBITDA, we are in a very fairly comfortable position. There is a fairly long moratorium to service the government’s debt. Banks understand this and based on our discussion with them, we should be able to take it to a conclusion in the near future. We will be taking new debt primarily for investments,” he said.

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Talking about conversion of interest into equity allocation to the government, Moondra said the company has confirmed an amount of Rs. 16,130 crore to the DoT and final confirmation from the department in this regard is awaited.

The government is expected to get around 33 per cent stake in VIL once the conversion of interest into equity is confirmed.


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Department of Telecom Said to Receive Rs. 17,876 Crore From Operators as Upfront Payment for 5G Spectrum

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The Department of Telecom (DoT) has received upfront payment of around Rs 17,876 crore from Bharti Airtel, Reliance Jio, Adani Data Networks and Vodafone Idea for spectrum they won in a recent auction, according to sources. While all telecom operators have opted to make payments in 20 annual installments, Bharti Airtel has paid Rs 8,312.4 crore equivalent to four annual installments.

Reliance Jio has made payment of Rs. 7,864.78 crore, Vodafone Idea Rs. 1,679.98 crore and Adani Data Networks Rs. 18.94 crore.

“DoT has received a total payment of around Rs. 17,876 crore. Only Bharti Airtel has paid for four annual installments at one go,” an official source said.

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The country’s biggest-ever auction of telecom spectrum received a record Rs. 1.5 lakh crore worth of bids, with Mukesh Ambani’s Jio cornering nearly half of all airwaves sold with a Rs. 87,946.93 crore bid.

Gautam Adani’s group has placed bids worth Rs 211.86 crore for the 400 MHz in a band that is not used for offering public telephony services.

Telecom tycoon Sunil Bharti Mittal’s Bharti Airtel made a successful bid of Rs. 43,039.63 crore, while Vodafone Idea Ltd bought spectrum for Rs. 18,786.25 crore.

On Wednesday, telecom operator Airtel announced that it had paid Rs. 8,312.4 crore to the Department of Telecom towards dues for spectrum acquired in the recently concluded 5G auctions.

With the payment, Airtel has paid four years of 2022 spectrum dues upfront. The company had an option to pay Rs. 3,848.88 crore upfront and the rest in 19 annual instalments.

Airtel said it believes that this upfront payment, coupled with the moratorium on spectrum dues and AGR (adjusted gross revenue)-related payments for four years, will free up future cash flows and allow Airtel to dedicate resources to single-mindedly concentrate on the 5G rollout.


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Jio Leads Race in Adding Mobile Subscribers in June; Airtel, Vodafone Idea Significantly Behind: TRAI

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Jio showed a net wireless subscriber growth of 4.2 million in June 2022, as per the latest monthly report released by the Telecom Regulatory Authority of India (TRAI). Airtel came second with a net growth of 7,93,132 users, whereas MTNL, BSNL, and Vodafone Idea reportedly lost users. The TRAI report mentions that the total wireless subscribers jumped from 1,145.5 million at the end of May to 1,147.39 million at the end of June. It also reveals that private players control nearly 90 percent of the market share in India.

According to the latest TRAI report, Jio showed a net growth of 4.2 million wireless users by the end of June. It is said to have experienced a monthly growth of 1.03 percent. The total subscriber base of Jio reportedly stands at 413.01 million users, which has allowed it to hold 36 percent of the market share.

Airtel was significantly behind with a net growth of 793,132 wireless users during the same period, as per the TRAI report. It still reportedly has 362.97 million wireless users in India. Despite recording a monthly growth rate of only 0.22 percent, the telecom provider grasps 31.63 percent of the market share.

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Notably, Jio and Airtel were the only two telecom providers that reportedly clocked an increase in their subscriber count. Vodafone Idea reportedly lost a total of 1.8 million wireless users in June 2022. It reportedly still has the third largest wireless userbase with a total of 256.65 million users, which is said to be 22.37 percent of the total market share.

BSNL and MTNL, the two government-run telecom providers, are said to have only 10 percent of the market share. BSNL has a total of 111.52 million wireless users after losing 1.3 million users in June, the report says.

The report also mentions that Haryana added the most wireless subscribers with a growth rate of 1.77 percent. Meanwhile, Jammu and Kashmir lost 4.18 percent of its wireless subscribers in June.


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Airtel Pays Rs. 8.3 Crore to DoT as Advance Instalment for Recently Purchased 5G Spectrum

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Telecom operator Bharti Airtel has paid Rs. 8,312.4 crore to the Department of Telecom (DoT) towards dues for spectrum acquired in the recently concluded 5G auctions, the company said on Wednesday.

With the payment, Airtel has paid four years of 2022 spectrum dues upfront.

Airtel said it believes that this upfront payment, coupled with the moratorium on spectrum dues and AGR (adjusted gross revenue)-related payments for four years, will free up future cash flows and allow Airtel to dedicate resources to single-mindedly concentrate on the 5G rollout.

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Telecom tycoon Sunil Bharti Mittal’s Bharti Airtel made a successful bid of Rs. 43,039.63 crore.

“This upfront payment of 4 years allows us to drive 5G rollout in a concerted manner given our operating free cash flow. Airtel also has access to Rs. 15,740.5 crore in capital from the rights issue, which is yet to be called.

“With the ideal spectrum bank, best technology and adequate free cash flow, we are excited to bring to the country a world-class 5G experience,” Bharti Airtel MD and CEO Gopal Vittal said in the statement.

The company had an option to pay Rs. 3,848.88 crore upfront and the rest in 19 annual instalments.

The country’s biggest ever auction of telecom spectrum received a record Rs. 1.5 lakh crore worth of bids, with Mukesh Ambani’s Jio cornering nearly half of all the airwaves sold with Rs. 87,946.93 crore bid.

Over the last one year, Airtel said it has also cleared Rs. 24,333.7 crore of its deferred spectrum liabilities much ahead of scheduled maturities.

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