‘VodaIdea will not be a price warrior’
Idea Cellular posted a loss of ₹1,107 crore in the quarter ended September 30, compared with a profit of ₹91.5 crore a year earlier, as intense competition in the telecom sector continued to hurt. Idea’s CEO and MD Himanshu Kapania remains hopeful that the company will be able to narrow its losses because of synergies from its proposed merger with Vodafone India Ltd. Edited excerpts from an interview:
What will you do with the cash that comes out of ATC deal?
It will strengthen the balance sheet. While we do so, we also need to expand our 4G footprint. For example, Idea today covers only 47% of Indian population for 4G. We need to improve consumer experience, enhance our capacity as more and more customers upgrade from 2G to 4G. To do that, the needs are higher and this additional cash will accelerate our 4G expansion in India.
What about debt, which has gone up to ₹54,000 crore?
Larger portion of the reason why the debt has gone up is because we had the spectrum auction last year same time and the cost of that shows in our net debt. As far as the company is concerned, all the repayments for FY18 and FY19 are concerned, they have been pre-paid. We don’t have any instalment to be paid and a large portion of our debt is from the government, where the IMG (interministerial group) is working towards changing the period of instalments from 10 years to 16 years. It will help us ease the debt level.
NEWDELHI:
Will you be able to narrow your losses?
IUC (interconnection usage charge) will be one factor to that. Also, losses will narrow from the proposed merger where a very significant cost reduction exercise will take place because we have given a guidance of over four-year period to have synergies of about $10 billion.
How do you plan to take on the market when you merge with Vodafone?
The merged entity will continue to focus on profitability. It will be the number one telecom operator but it will not be a price disruptor or a price warrior. The focus of the merged entity will be to bring down overall costs through synergies.