Aggressive competition makes telcos' revenue unsustainable: Vodafone Idea CEO Balesh Sharma
Balesh Sharma said there is no clarity on when the pricing situation will improve either in the domestic market.
Mumbai: The largest telco by subscribers Vodafone Idea said the market is "unsustainable" due to aggressive competition and warned that it's detrimental to government's flagship initiatives like Digital India.
In his first interaction after the merger of the two companies, chief executive Balesh Sharma said Thursday that all the three operators are burning cash and no one can expect them to invest in such a situation.
Blaming the low Arpu or average revenue per user all the three operators, reported massive drop in Arpu in the range of Rs 131 for Jio and a low Rs 100 for Airtel) for the cash flow troubles that the domestic telcos face and the resultant underinvestment in the network, he said against this in the neighbouring China the higher Apru makes it comfortable for operators there to invest for the future.
He also said there is no clarity on when the pricing situation will improve either in the domestic market.
Sharma said the company is advancing the projected Rs 14,000-crore savings to come in from the synergies arising out of the merger, by two years to FY21.
The company is undertaking a slew of initiatives, including better utilisation of towers to achieve the synergy benefits, he said, adding they will be investing Rs 27,000 crore over the next two fiscals.
It is also committed to pay Rs 3,000 crore towards spectrum fees and interest by March and Rs 12,000 crore in FY20, he said.
Vodafone Idea shares tanked 7 percent at Rs 41.45 bringing down its market cap to a low Rs 19,732.4 crore on the BSE, while the benchmark Sensex shed 0.62 percent.
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