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SIM Consolidation, Tariff Hikes Led To Fall In Q3 User Base: Vodafone Idea

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Vodafone Idea Ltd. attributed the loss of users from its network in the quarter ended December to recent tariff hikes and consolidation of subscriber identity modules.

The telecom operator lost as many as 58 lakh subscribers during the three-month period, according to Ravinder Takkar, its managing director and chief executive officer.

He said at an earnings call on Monday that the company also witnessed slower 4G subscriber addition and decline in user engagement in the form of lower minutes and data usage.

The company hiked prices of its entry-level prepaid plans in the second and third quarters of the ongoing financial year. It added 8 lakh 4G subscribers in the third quarter compared with 33 lakh in the second.

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Takkar cited a “coverage gap” in its 4G network as another reason for slowing accretion in subscribers compared with its competitors. “Fundraising plans aim to cover this gap.”

Vodafone Idea’s data consumption declined 5% sequentially to 5,242 billion megabytes. That came amid the withdrawal of promotional offers such as double data on certain plans.

To a question on whether the price hikes would affect affordability, Takkar said he doesn’t see a decline in teledensity—or the number of telephone connections per hundred individuals in an area—as a result and customers may not exit service at monthly tariff of Rs 99.

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“There are possibilities of SIM consolidation where customers stop or hold recharges of their multiple SIMs but it’s unlikely that they will completely exit the service,” he said.

The company highlighted in the earnings call that the recent decisions on deferment of spectrum auction installments, deferment of AGR-related dues, and conversion of the full amount of interest related to spectrum auction installments and AGR dues into equity will help strengthen the balance sheet of the company. The liquidity resulting from such decisions will help the company in debt reduction and will improve its capex capabilities.

Vodafone Idea expects Rs 17,000 crore of bank guarantees to be returned under the telecom reform package announced last year. Out of these, Rs 2,000 crore is license-related, of which 50% was returned. Around Rs 15,000 crore is related to spectrum, which will be returned after due processes. The bank guarantee reduction, the company said, will help it to raise funds from banks. The Department of Telecommunications, in October 2021, slashed bank guarantee requirements for telecom companies by 80%.

The company’s quarterly loss widened to Rs 7,230 crore in the third quarter compared with Rs 7,132.3 crore in the preceding three months, owing to an increase in its marketing and finance costs, while roaming and access charges, too, rose.

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