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India's largest telecom operator by users Vodafone Idea plans to increase minimum recharge tariffs to mend its profitability and aims to achieve its synergy target of Rs 14,000 crore by 2020-21, two years before the original target, reported Mint.
The company is preparing to take on Bharti Airtel and Reliance Industries-owned Reliance Jio by expanding its 4G network mobile tower sites. It is also planning to divide its market into four categories and adopt a specific strategy for each of them, sources told the paper.
The management of the loss-making Vodafone Idea, which was formed after Idea Cellular and Vodafone India merged in August, reportedly held a meeting with telecom analysts on November 21 to discuss its revival plans and strategy.
A person present at the meeting told the paper that the management believes a tariff hike is imminent and that it will be significant one, given the company's negative free-cash situation.
Vodafone Idea currently 4G coverage in 50 percent of the areas it serves. It hopes to push this to 70 percent in the next six months, and to 80 percent in 2019-20, the person was quoted as saying.
The telecom giant is currently awaiting full realisation of merger synergies, as the integration of spectrum assets and networks of both Vodafone and Idea is underway.
The merger of Idea Cellular and Vodafone was triggered by fierce competition in the telecom sector after the entry of Reliance Jio in September 2016.
Vodafone Idea announced its first quarterly results in September, reporting a loss of Rs 4,970 crore. The company's average revenue per user (ARPU) came in at Rs 88, much lower than Airtel's Rs 101 and Jio's Rs 131.70.
Last month, Airtel said it had simplified 7-8 of its tariffs, with minimum recharge plans starting at Rs 35. The aim was to reduce the number of marginal customers it had, control expenses and provide better services to its users.
The board of Vodafone Idea has set up a committee of directors to explore avenues to raise up to Rs 25,000 crore of capital. The committee will also look into a potential sale of the company's fibre network, which has over 156,000 km of intra-city and inter-city fibre routes.
The company has acknowledged a liquidity crunch in the telecom sector and has sought the government's help to meet its financial obligations, a government official said.
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
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