Vodafone and Bharti set to raise prices help pay government bill
Vodafone Idea declined to comment on an email sent to the company on the matter. Under this system, they agreed to share a certain percentage of revenue. "For Bharti it will be on 40 percent of consolidated EBITDA", Motilal Oswal said.
Sources said Vodafone has to receive an aggregate of about Rs 1,000 crore from Mumbai unit of income tax department and another Rs 6,000 crore from its Delhi office for multiple assessment years dating back to 2004-05. While the former two have revealed the date of 1 December, Jio is yet to reveal the effective date of the price hike.
The telecom giant also said an appropriate increase in tariffs in the next few weeks will come in a manner that it does not adversely impact data consumption or growth in digital adoption and sustain its investments.
"The acute financial stress in the telecom sector has been acknowledged by all stakeholders and a high-level Committee of Secretaries (CoS) headed by the Cabinet Secretary is looking into providing appropriate relief", it added.
Bharti said the telecom sector was highly capital intensive with fast-changing technology cycles that require continuing investments.
"Accordingly, Airtel will appropriately increase price offerings in the month beginning December", it added.
It stated that mobile data charges in India are the cheapest in the world, and that it was expanding its coverage to offer to offer 4G services to 1 billion Indian citizens by March 2020. However, the hike for these companies has come in the backdrop of the revised definition of adjusted gross revenue by the Supreme Court of India.
Bharti Airtel, which posted the highest ever loss of Rs 23,045 crore last week, said that it understands that telecom regulator Trai is likely to initiate a consultation for bringing rationality in pricing in the Indian mobile sector, which has been operating at prices that have been eroding its viability.
However, the key positive takeaway has been the amplified talks of government measures to support industry and indicative intent as suggested by media as well as Vodafone Idea (VIL).
Following the apex court judgement, Bharti Airtel too raised similar concerns. This ruling left the two facing over Rs 80,000 crore in dues and forced them to make provisions for the payments. Bharti Airtel share price hit a fresh 52-week high of Rs 432.95 against previous close of Rs 409.15 on BSE.
Vodafone Idea's net loss of Rs 50,921.9 crore for the three-month period marked the biggest quarterly loss in India's corporate history.
As on September 30, 2019, Vodafone Idea had a subscriber market share of 31.73 per cent, Reliance Jio had a market share of 30.26 per cent, and Bharti Airtel of 27.74 per cent.
"We expect price increase from Q1FY21, though valuations are at 9x FY22e mobile EBITDA".
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