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‘We will not shy away from raising prices,’ says Vodafone Idea CEO

“The current pricing in the market is unsustainable and it’s unsustainable because it provides either very low or almost zero return on capital invested,” Vodafone Idea MD and CEO Ravinder Takkar said during the telco’s Q2FY21 earnings call on October 30. Echoing Bharti Airtel's MD and CEO Gopal Vittal’s similar concerns, Takkar said that ARPU (average revenue per user) needs to get to ₹200 in the short term and up to ₹300 in the longer term. Absence of returns in a three-player market indicates that there is an issue with pricing, he said. Throughout the call, Takkar kept repeating that the quality of the Vodafone Idea network would dampen the outflow of subscribers, lead to the acquisition of customers required, and basically act as the panacea for all of Vodafone Idea’s woes. ‘Tariff hikes are critical to improving industry health’ The government has recognised the need for ARPUs to increase, Takkar said, since the government earns a fair amount of revenue as a percentage of the licence fees and spectrum user charges. The government is already looking at revamping floor pricing and has started a consultation process to that end, Takkar said. While all the three telcos — Airtel, Vodafone Idea and Jio — supported floor pricing in their submissions to the Telecom Regulatory Authority of India (TRAI), they differed on whether or not free inter-network calling should be available; While Jio supported it, Airtel and Vodafone Idea did not. Takakr reiterated that floor pricing would be required to restore…

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