Vi REDRAWING BIZ PLAN AFTER REFORM THRUST

Could potentially alter telco’s funding requirements

Vodafone Idea is working on a fresh business plan that could alter its funding requirements. Addressing shareholder queries at the company's AGM on Wednesday, Vi Chairman Himanshu Kapania said the exact amount will be worked out upon submission of a new business plan. “The management is working on a new business plan and will come to the board with the funding requirements,” Kapania told shareholders.

Vodafone Idea (Vi) is working on a fresh business plan that could alter its funding requirements.

Addressing shareholder queries at the company's annual general meeting (AGM) on Wednesday, Vi Chairman Himanshu Kapania said the exact amount will be worked out upon submission of a new business plan.

“The management is working on a new business plan and will come to the board with the funding requirements,” Kapania told shareholders in his first AGM as chairman.

Last September, the company announced plans to raise ~25,000 crore through a mix of debt and equity, but the plan remained stuck due to investor concerns.

While a media report on Tuesday said promoters may invest ~10,000 crore, Vi is yet to clarify on the issue.

Kapania, too, did not speak on promoter investment at the AGM. But he said the reform package will create a positive influence on fundraising, improve liquidity for the company and help it to increase its rural connect and boost 4G connectivity.

Vi stock gained 2.46 per cent and closed at ~11.25 on the BSE on Wednesday.

Earlier this month the union

Telco reforms will have a positive influence on Vi's fund-raising and help improve its connectivity

“THE MANAGEMENT IS WORKING ON A NEW BUSINESS PLAN AND WILL COME TO THE BOARD WITH THE FUNDING REQUIREMENTS” Himanshu Kapania

Vi chairman

cabinet approved telecom sector reforms providing a four year moratorium on payment of spectrum and adjusted gross revenue dues. The moratorium will help the company to invest in 5G technology whenever the ecosystem is ready and spectrum gets affordable, he said. The reforms bring immediate financial relief and will also ensure the telecommunications (telecom) sector does not turn into a monopoly or duopoly.

Kapania reiterated that the operating environment remained a challenge and there was a need to increase tariffs, which are unsustainable. Giving discounts to customers will not be prudent at this time, he responded to a shareholder query.

While currently its average revenue per user (ARPU) is around ~100, Vi management hopes that tariff hikes will happen soon. The company believes that ARPU needs to increase to ~200 as it was five years ago and eventually it has to go to ~300 for the industry to be sustainable and healthy.

Shareholders also raised concerns about service quality and asked about the company's plans to return to profitability.

The telecom company has been struggling operationally and financially due to high debt and intense competition. A question was raised on the dwindling subscriber base as well.

While the telecom company had managed to trim subscriber losses in the third and fourth quarters of 2020-21, it lost 12.4 million subscribers in the June quarter of 202122. The company’s customer base shrunk to 255.4 million subscribers, with the company blaming the erosion to the second wave of the Covid-19 pandemic.