Vodafone Idea Sees Further Tariff Hikes As It Draws Rs 6,000-Crore Capex Plan For FY26

Vodafone Idea Ltd. expects telecom tariffs to rise further even as it lays out an ambitious capex plan to expand 5G coverage and balance its debt burden.

Since June last year, India's three major telecom operators have raised rates to keep up with investments in 5G services.

"For the tariff to increase we believe that the entry-level tariffs are at a decent level," Chief Executive Officer Akshaya Moondra said on Monday during a post-earnings conference call with analysts. He acknowledged that entry-level rates do not have room to increase given a large population relies on it for basic minimum connectivity.

Moondra said incremental data usage comes at an extremely low and unsustainable price and further tariff increases are needed to improve performance.

"The telecom sector faces several challenges such as one of the lowest ARPUs in the world. The industry's ROCE remains below the cost of capital. Despite the price increases, India's ARPU still remains at the lowest in the world," he said.

In the fourth quarter, Vodafone Idea's average revenue per user, or ARPU — a key metric to assess a telco's health — was flat at Rs 175 as compared to Rs 173 in the preceding quarter.

The Aditya Birla Group company is also looking at Rs 5,000-6,000 crore capex for FY26, most of which will be implemented in the current and the following quarter, Moondra said.

"Our expansion efforts are underway to offer 5G services in all the 17 circles where we have 5G spectrum by August 2025. The 4G population coverage will increase to about 84%," he said.

"We remain actively engaged with our lenders for tying up debt funding towards execution of long-term network expansion plan," he added.

The CEO also clarified that the government is not planning to take a board seat after its shareholding rose to 49%.

"The increase in shareholding of the government is to provide support, but not with intent to have a board seat. We don't see the government trying to seek a management role in the company," Moondra said. The company's dues worth Rs 36,900 crore have been converted into equity.