Subscriber losses due to SIM consolidation, says Vodafone Idea chief

subscriber SIM cards
Image by Andrei Metelev | Bigstockphoto

Vodafone Idea’s top executive has downplayed concerns regarding continued subscriber losses on its network, saying the subscriber exits are due to SIM consolidation caused by the recent prepaid tariff hikes.

The tariff hikes will continue to result in SIM consolidation over the next couple of quarters, CEO and managing director Ravinder Takkar said during an investor call after Vodafone Idea’s fiscal third quarter earnings on Monday.

The telco lost 5.8 million users in the third quarter compared to 2.4 million in the July-September period. Its customer churn rose to 3.4% from 2.9 %.

However, Vodafone Idea’s 4G subscriber base increased by 800,000, with the overall 4G base now at 117 million. The telco ended the quarter with 247.2 million users.

In a statement on Friday, Takkar said that the second consecutive quarter of revenue growth was driven by several tariff interventions taken in the last few months.

“While the overall subscriber base has declined as a result of the tariff interventions, the 4G subscriber base remained resilient on the back of superior data and voice experience offered by Vi GIGAnet,” he said.

Despite the subscriber losses, third-quarter revenue increased over 3% sequentially to Rs 9,717.3 crore ($1.31 billion) in the October-December quarter, while ARPU rose to Rs 115 ($1.54) from Rs109 ($1.46) in the previous quarter due to the prepaid hike introduced in November.

The telco’s net loss for the fiscal third quarter widened to Rs 7,234.1 crore ($977.58 million) from Rs 7,144.6 crore ($965.49 million) in the previous quarter as operating and interest expenses rose.

Data usage per user on Vodafone Idea’s network also fell 5.4% sequentially to 14 GB in the October-December period. During the call on Monday, Takkar said that the withdrawal of some offers like weekend rollovers and additional data have led to the dip in data usage during the quarter.

The telco is now expecting equity funding infusion by March this year. Its promoters – UK’s Vodafone and the Aditya Birla Group (ABG) – are likely to infuse funds as well.

Vodafone Idea recently opted to convert interest on adjusted gross revenue (AGR) and spectrum dues into government equity of around 35.8%, making it the single largest shareholder in the cash-strapped telecom operator.

The decision came on the back of a telecom relief package announced by the Indian government in September. The package included a spectrum payment moratorium, an option to convert interest on airwaves into equity, and reduced bank guarantees amongst others.

As per reports, the relief package benefited Vodafone Idea the most, as it could save up to $13.51 billion cumulatively over four years.

The telco’s management has informed analysts that the government’s relief package – coupled with its recent price hikes – will make it more attractive for investors.

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