Vodafone Idea Proposes Tariff Hike To Pay AGR Dues To Telecom Department

Introduction of “fixed floor price” will double revenue of telecom industry from the current Rs1,75,000 crore, Vodafone Idea says.

A customer exits a Vodafone Idea Ltd. store in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)  
A customer exits a Vodafone Idea Ltd. store in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)  

Vodafone Idea Ltd. and its promoter Vodafone Group Plc have proposed tariff hikes across offerings to raise revenue that would enable the telecom operator to pay the adjusted gross revenue dues.

The proposal is part of a letter sent to the Department of Telecommunications and the Telecom Regulatory Authority of India. BloombergQuint has reviewed the letter. Bloomberg was the first to report it.

That comes after the Supreme Court threatened to hold India’s beleaguered telecom operators in contempt for not complying with its Oct. 24, 2019, order to pay thousands of crores worth of dues within the deadline.

Aditya Birla Group Chairman Kumar Mangalam Birla had warned of a Vodafone Idea shutdown if the government doesn’t provide relief on the liability.

As part of the letter, the telecom operator asked the new “floor price” to be made effective from Apr. 1, 2020. The price hikes will “ensure that sector is fully sustainable and in a position to pay deferred spectrum, and AGR dues and still invest to create world-class networks and services”, the letter said.

The wireless operator has proposed the following:

  • Fixed connectivity charges of Rs 50 per plan for a period of 28 days.
  • Outgoing voice (off-net) at 6 paisa per minute.
  • Data price of Rs 35 per GB.

The Department of Telecommunications has sought close to Rs 44,200 crore in adjusted gross revenue dues from Vodafone Idea. Of this, it needs to pay Rs 35,800 crore and the rest will be borne by promoter Vodafone Group Plc.

The telecom company has sought over 15 years, following a three-year moratorium, to clear the dues on payment of interest and penalty, according to Bloomberg report.

The introduction of “fixed floor price” will double the revenue of the telecom sector from the current revenue of Rs 1,75,000 crore, the wireless operator said, adding that its revenue is likely to touch the same levels as seen at the end of 2015-16.

The measure will ensure it generates enough revenue to pay for the deferred auction spectrum dues and deferred AGR payments of interest, penalty and interest of penalty, it said.

Also Read: Can Insolvency Be A Cure For AGR-Hit Vodafone Idea?

According to BloombergQuint’s calculations, if the proposal is accepted, the doubling of revenues for the sector would also provide additional Rs 31,500 crore in Goods and Service Tax to the government.

A Vodafone Idea spokesperson refused to comment on the proposal or the letter to the telecom department.

Also Read: What Will It Take To Save Vodafone Idea...

The Cellular Operators Association of India had earlier written a letter to the DoT, a copy of which was reviewed by BloombergQuint, seeking reduction in license fees from 8 percent to 3 percent. The industry body had also sought reduction in spectrum user charges to 0.5-1 percent for the upcoming auctions.