New Delhi, Aug 13 (PTI) Amid reports that the government may have sounded out some sovereign funds for offloading its stake in the telco, Vodafone Idea on Tuesday said that it is up to the Centre to decide what it wishes to do about its holding, and that the company has had no communication from them on the matter.
During Vodafone Idea’s Q1 earnings call, CEO Akshaya Moondra further said that the company has seen port-outs by its users to BSNL increased since tariff hikes were effected, and is closely watching the situation. The VIL top boss, however, believes that quick decisions to port out taken purely on the basis of tariff action may not eventually sustain, given the 4G coverage offered by VIL.
To a question on media reports that the government may be exploring whether sovereign wealth funds would be keen on picking up its stake in the company, Moondra said: “We have had no communication with the government…to that extent, we have to say that government as a public shareholder…they are free to take decision with respect to their investment. That is an independent subject.” At the same time, he said, whether government continues with its shareholding, or divests gradually is independent of their policy stance on conversion of dues to equity.
“Reforms package was announced with the objective of saying support needs to be provided and the government is very clearly focused on having three healthy private operators…The conversion to equity was a means of supporting balance sheet of the company by converting some debt into equity. I would say, the policy of the government remains the same, what they do with their public shareholding is their decision… we as a company do not have any information or engagement with them on this subject,” Moondra said.
Responding to another question on impact of the recent tariff hikes on the ground, he said, while it is still early days to draw a conclusion about SIM consolidation, given that the entry price increase this time has been minimal, the SIM consolidation could accordingly be relatively lesser.
“One of the trends we have seen is that the port-out to BSNL has generally risen from pre-tariff increase levels, which is a space we are watching…and the reason for that is because they (BSNL) has not increased their tariffs so there is a fair amount of arbitrage,” he said.
The VIL CEO, however, believes that any decision to port out purely on the basis on tariffs may not sustain.
“We are watching this space – our expectation is that customers who are used to having a good coverage and experience of 4G coverage, probably current offering of BSNL may not be to that extent…as people who may have taken a quick decision in terms of tariff actions…may most likely come back. But we will keep on watching this space and see what needs to be done,” he said.
Vodafone Idea on Monday reported narrowing of losses for just-ended June quarter to Rs 6,432.1 crore, mainly on the back of 4G subscriber additions. The telecom firm said it is in the midst of expanding 4G coverage and capacity and launching 5G services post the recent fundraising. VIL’s losses stood at Rs 7,840 crore in Q1 FY24 and Rs 7,674.6 crore in Q4 FY24.
The revenue dipped 1.3 per cent year-on-year to Rs 10,508.3 crore in the fiscal’s first quarter ended June 2024. The company’s ARPU (average revenue per user) for the quarter stood at Rs 146.
During this calendar year, the company raised equity funding of about Rs 24,000 crore, including Rs 18,000 crore via an FPO in April, Rs 2,080 crore via preferential issuance to ABG (promoter) entity in May, about Rs 2,460 crore via preferential issuance to Nokia and Ericsson in July, and Rs 1,600 crore via conversion of OCDs between March 2024 to July 2024.
“This equity fund raise bolsters our capex roll-out for building a top quality 4G and 5G network to contribute towards India’s digital transformation,” the company said in its earnings release.
Post these issuances, the promoters’ shareholding stands at 37.2 per cent and shareholding of the government is at 23.1 per cent. PTI MBI HVA
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