Vodafone Idea will be increasing its tariffs from December 1, 2019, the company announced on Monday. The company said that it is hiking tariffs due to the crisis in the telecom industry.
“The acute financial stress in the telecom sector has been acknowledged by all stakeholders and a high level Committee of Secretaries (CoS) headed by the Cabinet Secretary is looking into providing appropriate relief,” the company said in a statement.
It stated that mobile data charges in India are the cheapest in the world, and that it was expanding its coverage to offer to offer 4G services to 1 billion Indian citizens by March 2020.
Vodafone Idea has over 300 million customers in India.
Vodafone Idea Ltd, which posted a loss of Rs 50,921 crore in Q2, earlier said that it would be able to continue to run operations only based on the relief it gets from the government.
On Monday, on the news of a possible government revival, Vodafone’s stock jumped nearly 25% on the NSE. This came after Finance Minister Nirmala Sitharaman said the government doesn't want any telecom company to shut operations.
Vodafone Idea’s massive loss — the biggest loss in India’s corporate history — came after the Supreme Court pronounced its judgment on the matter of Adjusted Gross Revenue.
The problem started in 1999, when telecom operators migrated to a new system offered by the government. Under this system, they agreed to share a certain percentage of revenue. Operators argued that AGR should comprise only revenue from telecom services, but the DoT insisted that it should include all revenue earned by an operator. Putting an end to a 14-year-old legal battle, the SC said that telecom operators have to shell out a whopping Rs 92,000 crore in total in past dues at a time when they are already grappling with tough competition, debt pressure and shrinking revenues.
A day before the results for Q2, the Department of Telecommunications notified telcos that the dues had to be paid within three months. After this, both Vodafone and Airtel posted huge losses.