Vodafone Idea To Raise Mobile Services Rates From Dec. 1
A customer uses a mobile phone while leaving a Vodafone store in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Vodafone Idea To Raise Mobile Services Rates From Dec. 1

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Debt-ridden telecom operator Vodafone Idea Ltd. on Monday said it will raise mobile services rates from Dec. 1 in the wake of ongoing financial stress.

"To ensure that its customers continue to enjoy world-class digital experiences, Vodafone Idea will suitably increase the prices of its tariffs effective Dec. 1, 2019," the telecom company said in a statement.

Vodafone Idea did not disclose the quantum of hike in tariff it is planning from Dec. 1.

The company at present provides monthly mobile services at starting price of Rs 24 without data, and plans with data service starts from Rs 33 onward.

Vodafone Idea last week reported consolidated loss of Rs 50,921 crore - highest ever loss posted by any Indian corporate - for the second quarter ended Sept. 30, on account of liability arising out of the Supreme Court order in the adjusted gross revenue case.

Also read: Vodafone Idea Exploring Option To Monetise Data Centres To Pare Debt

The Supreme Court last month ruled in favour of the government and directed telecom companies, including Vodafone Idea, to pay dues as demanded by the Department of Telecom.

Vodafone Idea said that its ability to continue business will depend on reliefs sought from the government and positive outcome of the legal option it has.

"The acute financial stress in the telecom sector has been acknowledged by all stakeholders and a high-level Committee of Secretaries headed by the Cabinet Secretary is looking into providing appropriate relief," the statement said.

Both Vodafone India and Idea Cellular merged their telecom business to handle the tariff war in the sector, triggered by the new entrant Reliance Jio in 2016. The merged entity Vodafone Idea came into existence on Aug. 31 last year as the biggest telecom operator in the country with 408 million mobile customers. However, the financial woes for the company did not end and the company lost over 100 million mobile subscribers since the merger due to the cutthroat tariff war.

The company has been investing in building networks. However, low return from tariffs added to its financial woes. According to the Telecom Regulatory Authority of India, prices of mobile data have fallen drastically by about 95 percent to Rs 11.78 per gigabyte. Mobile calling rates dipped by about 60 percent to about 19 paise per minute between June 2016-December 2017.

Reliance Jio is offering unlimited voice calls in all its mobile services phone plan. Jio too, though, is now charging for phone calls to other operators at 6 paise per minute.

Promoter firm Vodafone Group Plc., which holds a majority stake of 45.39 percent in Vodafone Idea, has said that the group will not infuse any further equity investment in the Indian telecom venture and reportedly similar stand has been taken by the Aditya Birla Group. This leaves the company with no other option but to support operation from internal resources.

Vodafone Idea said it has the largest spectrum footprint and by accelerating its network integration, the company is rapidly expanding both its coverage and capacity and is well on track to offer 4G services to 1 billion Indian citizens by March 2020.

"Vodafone Idea Ltd. will continue to actively invest in making its network future-fit by embedding new-age technologies and launching new products/services to cater to the evolving needs of its over 300 million customers," the statement said.

Also read: Vodafone India Unit Pleads for Relief After $7 Billion Loss

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