Making a pitch for further tariff hikes, a senior Vodafone Idea official on Thursday said telecom subscribers consuming more data should pay more to enable the industry to generate reasonable returns and ensure connectivity to all sections of society.

During Vodafone Idea (VIL) earning call for the second quarter ended September 30, 2024, the company's CEO Akshaya Moondra said that the loss of subscribers to BSNL due to the recent tariff hike is quickly reversing because of the state-run telecom firm's "network experience".

He said that the Indian wireless sector is at a crucial junction.

Moondra said that while on one side, large investments are required to support the emergence of new technology and to support explosive data growth, on the other side, affordability of tariffs should be maintained to ensure connectivity to all sections of society.

"This is possible when customers who are using more will pay more to enable the industry to generate reasonable return on capital on the large investment that has been made. Hence, further tariff rationalisation is needed for the industry to recover its cost of capital," he said.

The debt-ridden telecom firm has reported a narrowing of its consolidated to Rs 7,175.9 crore in the September quarter mainly on account of increase in average revenue per user (ARPU) post-tariff hike in July.

The company's mobile customer ARPU, excluding those of machine-to-machine, increased 7.8 per cent to Rs 166 on a quarter-over-quarter basis from Rs 154 in the April-June period but still continues to be lower than that of its competitors Reliance Jio and Airtel.

Though the tariff hike resulted in the company losing customers on a quarterly basis, Vodafone Idea CEO Akshya Moondra still indicated the need for another hike to cover the cost of capital.

After the tariff hike, all three private operators Reliance Jio, Bharti Airtel and Vodafone Idea lost a significant number of subscribers to BSNL that largely provides 3G service and 4G in select telecom circles.

VIL's overall subscriber base declined to 20.5 crore from 21 crore and 4G subscriber base to 12.59 crore from 12.67 crore on a quarter-on-quarter basis.

He said that the September quarter is a weak quarter for subscriber growth which has in turn added to the decline.

"However, the impact of BSNL has been there in this quarter, we have seen that impact reversing quite quickly, from August to September to September to October, and October to November," Moondra said.

He said that in some manner VIL is inching towards the position which was there before the tariff hike but some loss which has happened during the quarter will still take some time to unwind.

"We believe it will happen based on the customer experience because there is definitely a differential in experience for a customer who is a high user of either data or voice," Moondra said.

BSNL has plans to roll out 4G services across India by mid of next year.

During the reported quarter, VIL concluded a mega deal of about USD 3.6 billion (approximately Rs 30,000 crore) to aggressively update its 4G network and launch 5G services in select circles.

The company has announced plans to boost its network capacity with a total capital expenditure of about Rs 10,000 crore during the current fiscal year.

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