In Short:
Vodafone Idea (Vi) is following in the footsteps of Bharti Airtel by saying that users who use more data should pay more. They believe that tariff rationalization on high-usage plans is essential for operators to earn reasonable returns on their investments. Vi has not been able to increase its ARPU like its competitors due to a large number of legacy network users and slow 4G subscriber growth.
Vodafone Idea CEO Emphasizes on Paying More for Increased Usage
Vodafone Idea (Vi) is aligning its strategy with Bharti Airtel by suggesting that users who consume more data should pay more. This shift in approach is aimed at enabling telecom operators to generate reasonable returns on their investments.
Importance of Tariff Rationalisation
During the earnings call for Q4 FY24, Akshaya Moondra, CEO of Vodafone Idea Limited (VIL), highlighted the importance of tariff rationalisation on high-usage plans. He stressed the need for a pricing structure that encourages users to pay more for consuming more data.
Moondra emphasized that the pricing of mobile plans should be proportional to the level of data consumption. While entry-level plans may see minimal changes, plans used by heavy data consumers are likely to undergo significant adjustments.
Challenges Faced by Telecom Operators
Indian consumers currently enjoy mobile data at very affordable rates compared to global standards. This has made it challenging for telecom operators to generate satisfactory returns on their extensive network and spectrum investments.
Moondra noted that the telecom industry requires substantial investments in infrastructure, technology, and regulatory compliance, making it essential for operators to implement measures that boost revenue generation.
Impact of SIM Consolidation and ARPU Growth
Addressing the issue of SIM consolidation, Moondra suggested that while users may not entirely cease consuming mobile services, individuals with multiple SIM cards may reduce the number of active connections.
Despite adopting tariffs similar to Bharti Airtel, Vodafone Idea Limited has struggled to significantly increase its Average Revenue Per User (ARPU) due to a higher number of legacy network users. The slow addition of 4G subscribers has also affected the company’s ARPU growth.
