Vodafone-Idea wants DoT to increase tariff to Rs 35/GB for data

“Vodafone-Idea also wants a minimum monthly connection charge of Rs 50 to be imposed on all users, beginning April 1st, 2020”

Vodafone-Idea has reportedly written to the Department of Telecommunications (DoT), asking for a revised time period to allow it to pay off AGR dues, along with recommending a revision of tariff in order to help it account for the massive losses that the telco is incurring. According to a report, Vodafone-Idea wants the base price of data per gigabyte in India to be set to Rs 35, while outgoing calls should cost 6p per minute. This would mean a hike in per GB data cost by around 7 times the existing price. Furthermore, Vodafone Idea also wants a minimum monthly connection charge of Rs 50 to be imposed on all users, beginning April 1st, 2020. At present, while calling is largely free across all networks and even while on nation-wide roaming, each gigabyte of data costs a user approximately Rs 5.

These demands are reflective of a telecom company that is facing insurmountable losses and a very real threat of having to exit the Indian market. Major telecom operators like Reliance Jio, Airtel and Vodafone revised prepaid recharge packs, increasing the overall cost of calls and data by up to 50 percent. Even after the revision, telecom services remain under the threat of humongous losses. Earlier this month, mobile service operators were pulled up by the Supreme Court for failing to comply with its verdict related to adjusted gross revenue (AGR) dues. It mandated telecom companies to pay AGR dues of over 1 trillion to the DoT by 23 January.

On Saturday, Airtel self-assessed that it owes dues amounting to Rs 13,004 crore, although the government had calculated that the Sunil Bharti-led company owed over Rs 35,000 crore, LiveMint reports. Meanwhile, Vodafone-Idea has been the worst hit by the verdict with past dues crossing Rs 50,000 crore. The telco has so far paid off Rs 3,500 crore only.

Vodafone-Idea’s demands, hence, may seem a bit steep, and it remains to be seen how the DoT responds to this approach by the operator. It faces the prospect of being forced to exit its India business, after a Supreme Court of India ruling imposed massive penalties on all telecom operators and associated parties, labelled under Adjusted Gross Revenues (AGR). With a penalty of Rs 53,000 crore imposed upon itself, Vodafone-Idea has appealed for a period of 18 years to be allowed to pay off the amount. It has also asked for a three-year grace period during the 18-year duration of paying off the AGR dues, during which it has appealed to not be charged any interest or penalty.

While DoT’s response is yet to be seen, increasing the tariff to this extent may have a further adverse effect on Vodafone-Idea. With Bharti Airtel and Reliance Jio largely in positions of power, a higher tariff may see even more users leaving the operator’s network, which in turn would affect the company’s top line even if average revenue per user grows.