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The decision of Vodafone Idea Ltd (VIL) to spend money on rebranding and IPL marketing when it is currently incurring loses came under scrutiny at the Annual General Meeting (AGM) on September 30. At least one shareholder questioned the debt-ridden telecom operator's actions.
Kumar Mangalam Birla, Chairman of Aditya Birla Group, which owns VIL with Vodafone Plc, said tariffs continue to be the lowest in India, while the data consumption in the country is the highest in the world.
According to CNBC-TV18, Birla added that the adjusted gross revenue (AGR) dues have added to the financial woes of the telecom operator and that efforts are being made to resolve the financial burden through staggered payments, which have been upheld by the Supreme Court (SC).
The Department of Telecom (DOT) is also looking to restore financial health of the sector through a two-year moratorium. The pricing revival is critical for the health of the sector, Birla said.
According to Birla, long term-opportunities remain intact. The increase in content consumption through videos and social media has driven strong data demand. Work from home is also driving increased data consumption and will provide a significant uptick to all telcos, he added.
A CNBC-TV18 report said that all shareholders questioned the company about its survival given losses being incurred by the company, Jio's aggressive expansion and how the company plans to tackle it, Capex and 5G plans apart from the excess money spent on rebranding and IPL marketing.
Though many of the above questions remained unanswered, Vi officials did speak about capex, their strategy ahead, and 5G plans.
On Capex, the company said a fund raise of Rs 25,000 crore was sufficient and it would help the company compete effectively.
As for 5G, it will be in a good position to launch 5G services and added that before 5G spectrum auction takes place, we need to develop use cases for India. The telco also said that it has a strategy in place to expand its subscriber base.
VIL is exploring various avenues for raising additional funds to ensure adequate cash flows for stable ongoing operations.
VIL is making efforts to keep its business running in India, after the SC gave telecom companies 10 years to pay AGR dues.
Vodafone Idea owes slightly over Rs 50,000 crore to the DoT as AGR-related dues.
The SC asked telecom companies to make an upfront payment of 10 percent of the balance AGR dues by March 31, 2021.
