Vodafone Idea Seeks Mobile Tariff Hike to Pay AGR Dues in India

The latest attempt from telco looks to increase mobile tariffs for users, helping them earn more revenue.

The telco has to pay dues of over Rs 44,000 to the telecom department in India.

(Photo Courtesy: Vodafone.co.uk/Twitter/@ideacellular/Altered by The Quint)

Vodafone Idea has reportedly proposed hiking mobile tariff rates in India, which is likely to boost its coffers and help in paying off the adjusted gross revenue (AGR) dues to India’s telecom department.

This has been mentioned in a letter by the telecom operator quoted in this BloombergQuint report on Thursday, which has been sent to the Department of Telecom (DoT) as well as the Telecom Regulatory Authority of India (TRAI) this week.

The report explains that Vodafone Idea proposes the country’s telecom department should increase the data prices, as well as charge for making voice calls. These measures, it says, will help the beleaguered telco to raise its revenues, which can then be used for paying AGR dues of over Rs 44,000 crore.

Through the proposal letter, Vodafone Idea wants the ‘new floor price’ to made effective from 1 April 2020 onwards. The telco feels these changes will ensure the sector becomes fully sustainable, allowing them to pay for the dues, as well as invest on its network and services.

In addition to this, the report says Vodafone Idea is hoping for leniency from the telecom department, as it seeks period of 15 years, over which it wants to pay the AGR dues, which includes penalties and interest.

Mobile data prices in India are the cheapest in the world, while voice calls have become free (chargeable for making calls on different networks), putting the telecom sector in a precarious position, with the revenues hard to come by.

Add to that, the recent Supreme Court judgement on AGR dues, pending for years, has put extra financial burden on telcos, especially Vodafone Idea, which has reported heavy losses over the past few quarters.

In fact, the company’s chief has termed the situation unsustainable, and warned it might not be able to continue operations if the government doesn’t provide them relief from payment of dues.

If the DoT considers going ahead with Vodafone’s proposals, mobile users in India will be asked to pay more for their data, voice calls, hiking their monthly bills significantly.