Vodafone Idea, the trouble hit loss-making telecom operator in India, is under massive pressure regarding complying with Supreme Court’s order to clear adjusted gross revenue (AGR) dues which amount to more than Rs 50,000 crores. Therefore, to pay off these dues, Vodafone Idea has recently put forward some demands across the Indian government. However, if approved, these demands will definitely make the telco’s customers very unhappy.
Vodafone Idea’s demands clearly show that they want the current fixed minimum tariffs for mobile data to be increase to Rs 35 per GB. This price point stands at stark contrast with that of the current price which is 7-8 times lower.
They have also demanded a 6 paise per-minute charge for calls along with a fixed monthly charge of Rs 50 to be put in place starting from 1st April 2020. This would enable them to pay off their statutory dues hence, making their business sustainable once again.
At present, the current mobile internet prices range from Rs 4-5 per GB. Vodafone Idea’s current demands to raise the calling and mobile internet rates came immediately within three months after they had previously raised their prices up by a whopping 50 per cent.
According to official sources, Vodafone Idea has sought 15 years worth of time to clear their pending dues including a three-year temporary prohibition period on them paying any interest and penalty.
According to a news outlet, an official, under anonymity, who is directly linked with these developments said that the demands made by the trouble-hit telco is a huge problem for the government to fulfil at this moment.
Licence fee and spectrum usage charges are levied by the Indian government based on the revenue earned by these telecom companies.
As of right now, Vodafone Idea has managed to pay off only Rs 3,500 crores out the total Rs 53,000 crores as calculated and confirmed by the Department of Telecommunications (D.O.T)
Vodafone Idea Huge Price Hikes?
According to anonymous sources, the now merged Vodafone Idea telecommunications company, which has 332 million customers, believes that an increase in mobile call and data rates will help them generate the same level of revenue as Vodafone and Idea individually generated in the year 2015-16. It will take three years to get to that level after tariff hike for Vodafone Idea and hence it has sought three-year moratorium for payment of adjusted gross revenue dues.
Vodafone Idea has also written a letter to the telecom department of India expressing that they are unable to pay the AGR dues if it’s not backed by the government. The company also demanded the government to take urgent measures to fulfil its demands in this crisis-ridden sector which includes the implementation of floor pricing, reduction in levied charges as well as allowing staggered payment.
The letter clearly mentioned that Vodafone Idea is ‘not in a sound financial state’ as of right now. The current condition of the telco also begs us to question if they will be able to survive such an uphill battle against the government regarding these demands and turn out sustainable in the long run or if they will have to exit the Indian telecommunications market altogether. We will surely keep you posted on further developments