Vodafone Idea Ltd
NSE:IDEA
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Good afternoon, ladies and gentlemen. This is Margaret, the moderator for your conference call. Welcome to the Vodafone Idea Limited conference.[Operator Instructions]We have with us today, Mr. Ravinder Takkar, MD and CEO of Vodafone Idea Limited; and Mr. Akshaya Moondra, CFO of Vodafone Idea Limited, along with other team members of the senior management on this call.I want to thank the management team on behalf of all the participants for taking valuable time to be with us. Given that the senior management is on this conference call, participants are expected to focus on the key strategic and important questions to make sure that we make good use of the senior management's time.I must remind you that the discussion on today's call may include certain forward-looking statements unless be viewed therefore, in conjunction with the risk that the company faces.With this, I hand the conference call over to Mr. Ravinder Takkar. Thank you, and over to you, sir.
Thank you, Margaret.On behalf of Vodafone Idea, I welcome all participants to this earnings call.On 14th August, our Board of Directors adopted the unaudited results for the quarter ending June 30, 2021. The detailed press release, quarterly report and unaudited financials have been uploaded on our website, and I hope you had a chance to go through the same.Let me start with discussing our ongoing strategic initiatives, along with operational highlights for the quarter, and I will then hand over to Akshaya to share details on the company's financial portfolios.The quarter 1 of this financial year was impacted due to severe second wave of COVID that hit the country. Several states such as Maharashtra, including Mumbai City and Delhi witnessed stringent restrictions since mid-April, while Karnataka and several other states followed same. There was a complete lockdown in majority of the districts, while there was weekend/partial lockdown, restricted timings and night curfew in the rest.As a result, gross additions as well as tertiary sales were impacted. Our workforce was also impacted. We lost a few of our colleagues, while several others have been affected and many of our colleagues have lost their near and dear ones in this COVID pandemic.We have provided full medical support to every employee who had to be hospitalized or needed any medical assistance. We have been arranging vaccination camp for our employees and their families. The vaccine slot finder our feature on the Vi App enabled our users to get easy access to information related to vaccine availability.For easy booking of vaccine, Vi has integrated the COVID app on the Vi app for its customers. Our relentless focus has been on delivering uninterrupted services and great end-user experience while ensuring safety of our employees and partners. Throughout this pandemic, our network' warriors made heroic efforts to keep the network running 24/7 throughout the lockdown to ensure our customers can work, study, transact and get the daily dose of entertainment from the safety of their own homes.With the fall in number of COVID cases and beginning of unlocking by states, business activity has started to recover gradually. Though the impact continues to remain uneven across circles, we expect the operational and supply chain challenges to normalize in the coming months.Now moving on to our key strategic initiatives. The first 1 being focused network investments. We continue to follow a focused approach to investments, the bias towards our 16 priority circles which contribute over 94% of our revenue. This helps us in utilizing our CapEx effectively while ensuring that we continue to offer superior customer experience in these areas.We have progressively upgrading our 3G network to 4G. We are closed over 12,500 3G sites during the quarter, while we added over 6,500 4G FDD sites, mainly through the refarming of 2G and 3G spectrum. The process of refarming 3G spectrum to 4G on a majority of our sites in various cities have substantially enhanced the GIGAnet 4G capacity in those cities.Overall, broadband site count stood at 447,144, lower than compared to 452,650 a quarter ago on account of shutdown of 3G sites, and we continue to add 4G sites. These 4G coverage has already crossed the benchmark of 1 billion Indians last year. Our focus on enhancing our network capacities and providing superior customer experience is helping us drive stronger network perception.Our constant endeavor to be the best good network in the country is testified through top ranking across independent external reports on both voice and data. This comes at a time when people and businesses are more reliant on telecom connectivity for their work, education and all other aspects of life.While we are currently in the middle of our 4G CapEx cycle, we have been deploying the equipment, which is 5G-ready on both radio and core. We have the advantage of having the latest 4G equipment and technologies which are capable of upgrade to 5G. Also, we have made substantial progress in deploying several 5G-ready technologies such as massive MIMO, DSR, cloudification of core, et cetera. And they are very much central to our strategy for future growth.As mentioned last quarter, we have initiated 5G trials with our major metro quarters, which are progressing well. We are setting up dedicated captive networks to test out various use cases for demonstration to the DOT. As part of our digital transformation journey, we has also partnered with Cisco to design and build a cost-effective network architecture will drive greater speed to market with emerging opportunities in the 4G and 5G, cloud and IoT area.Now moving on to market initiatives. With the need for data increasing, we launched and promoted a new campaign, focusing on Vi Hero Unlimited plans. This campaign highlighted the 3 features that the plan offers, weekend data rollover, lifetime free data from 12 a.m. to 6 a.m. and double data. The Vi Hero Unlimited campaign seeks to ensure that the customers thrive in the digital ecosystem and that they do not run out of data on their paths. The streak proposition aims to increase Unlimited and 4G subscriber base by attracting new users to the Vi Network. We aim to scale up the propositions of high ARPU subscribers to large programs in conjunction with OEMs and NBFCs for 4G devices. We have also expanded e-SIM technology for Vi postpaid users in 10 priority circles.We also continue to look for ways to improve ARPU by driving 4G, UL plan penetration. We have taken several tariff intervention in the last couple of months. We launched a 30-day and a 60-day plan with no daily limits with lower data bundles as compared to the UL daily plans in Q1.We increased the entry-level corporate postpaid plans from INR 199 to INR 299. We have increased the entry-level non-UL prepaid plans from INR 49 to INR 79 in majority of the circles.We have rolled out hike in some of our postpaid family plans across all circles just a few days back. While these tariff interventions are steps in the right direction and will help in improving ARPU, such changes are not material enough to solve the structural issues that the industry is facing. As mentioned by us, time and again, tariff hike remains a critical factor to revive the sector and the pricing structure has to change where operators have the ability to charge customers for incremental usage. Thus, we continue to engage with the regulator on flow pricing, which is critical and necessary to improve the overall health of the industry.Now on business services. services. Business service continues to be 1 of our key focus areas. In Vi Business, as we progress on our journey from telco to techco, we continue to strengthen our partnership with our customers with a new range of offerings like Vi Integrated IoT, managed SIP, Vi Cloud Firewall service and Vi Business Plus, under the mobility outlook.We are the first and the only telecom operator to provide managed SIP services in India. Our Cloud Telephony solution is helping SMEs to automate and enhance their customer interaction with features like auto receptionists, lead management and others.The pandemic has accelerated growth in digital ways of working for businesses and workloads are increasingly migrating to cloud leads to a demand, rise in demand for reliable security solutions. We have strengthened our security portfolio with the launch of the Vi Cloud Firewall, a cloud-deployed security solution for enterprises and businesses. We are powering hybrid workplaces and providing seamless digital experience with differentiated propositions like Vi Business Plus. Vi Business Plus has businesses quite the balance between business objectives and employee preference with advanced solutions like location tracking, mobile security and entertainment. The new and emerging cloud and IoT services are central to our business services growth strategy. We continue to drive tremendous synergy from our relationship with Vodafone Group, who are a global leader in the IoT segment.We have further strengthened our IoT portfolio, with the launch of Integrated IoT solutions for enterprise, which is a pioneer offer in the market. We have started the journey of Integrated IoT with proposition of smart infrastructure, smart mobility and smart utilities to address the need of these industries, and we'll keep adding to the list.The launch of our Integrated IoT Solution is a strategic step towards making Vi Business and IoT ecosystem integrator for Indian enterprises and driving our transformation from telco to techco. The next strategic initiative is driving partnerships and digital revenue streams.We continue to partner with content providers to promote new and engaging content through Vi movies and TV. Our vast content library, coupled with differentiated data benefits in the industry has led to a wining position for both, us and our customers. I'm happy to announce that we would be launching a music streaming service in partnership with a leading content provider, which will be available to all our prepaid and postpaid consumers. The partner will not only bring in a rich repository and music category across genre and languages, covering over 15 Indian languages, but also had broadcast and music videos as part of the offer. We are also building a strong recommendation engine to offer a truly personalized experience to the users.We are quite confident that we should be able to offer a truly delightful experience to our users a comparable and better on many fronts than the current services available in the country. We will provide more details closer to the date of launch.One of the key pillars of BIL's strategy is to drive partnerships and digital revenue streams across segments. We have been entering into strategic partnerships with key players in the area of learning and upskilling, health and wellness, and business hub to offer help to the new age customers. The company has forged partnerships with several Internet First companies and plans to onboard more partners under each of these areas to enable Vi users get exclusive offers from these players. Our innovative and partnership-led content strategy has thus helped us adopt a telco first approach for content monetization in this hugely untapped market.Vi is committed to delivering best-in-class service to their subscribers and bridging the digital divide that separates urban from rural. We will continue to focus on our platform facilities to offer deep integration with our partners for a differentiated experience, creates monetization opportunities and truly become an integrated digital service provider.And lastly, on our cost optimization exercise. As you are aware, we target to achieve INR 40 billion of annualized OpEx savings by the end of this calendar year. As of this quarter, we have already achieved 70% of the targeted annualized cost savings.Now moving on to operational highlights for the quarter. Revenue for the quarter was INR 91.5 billion, a decline of 4.7% quarter-on-quarter, impacted by the slowdown of economic activity during the severe second wave of COVID. The subscriber base declined by INR 12.3 million and now stands at INR 255.4 million impacted by lockdown and restricted store timings.Our 4G subscriber base was relatively resilient at INR 112.2 million, down INR 1 million versus Q4 FY '21. The data demand surging during the lockdown, we witnessed strong data volume growth of 13.2% quarter-on-quarter, which reflects strong consumer engagement and superior experience offered by Vi Network.And in quarter, May was the worst impacted month, while we had started to see some recovery in June. In July, with the markets gradually opening and business activity resuming, we have seen an improvement in gross additions and recharge price. Meanwhile, we continue to focus on upgrading more customers to 4G plan and devices which remains a key focus area for us.Now a quick update on other developments. On the AGR matter as you are aware we had filed a modification application in the Supreme Court, requesting them to allow the DoT, to correct the manifest, clerical and arithmetic errors through computation of the AGR demand. On July 23, 2021, the Honorable Supreme Court rejected the appeal. And VIL and other telecom operators.We are just to say that we were disappointed by the verdict. We have recently filed a review petition in the Supreme Court clearly indicating that the impact, it is not for us to challenge the judgement of the court but to seek corrections in the man view to manifest errors.Further, Mr. Kumar Mangalam Birla has stepped down as non-executive Director and non-executive Chairman of the Board. Subsequently, Mr. Himanshu Kapania has been elected on his place. The Board has also appointed Mr. Sushil Agarwal as a Director. Both Mr. Himanshu Kapania and Mr. Sushil Agarwal are veterans from the ABG group and bring in a wealth of experience.So Mr. Birla has stepped down, Vi as well as from the Birla Group. And the Vodafone Group are committing to providing support and guidance to the company, in line with the stated positions of both the groups. We will thus continue to get benefit from their health care experience and support. On fund raising, we continue to remain in active discussions with potential investors.With that, now I hand over to Akshaya, who will share the financial highlights on the quarter.
Thanks, Ravinder. A very good afternoon to participants from India and a good morning or evening as applicable to overseas participants. As Ravinder mentioned, the revenue for the quarter declined by 4.7% compared to last quarter as the customer's ability to recharge availability of physical recharges, and acquisition of new customers was impacted due to lock down or restrictions in majority of the districts during the severe second wave of COVID.Adjusted for Ind AS 116 impact, EBITDA was INR 13.8 billion for the quarter. They were one-offs of INR 1 billion in the quarter, primarily related to network and IT expense and employee costs. Adjusted for one-off EBITDA of INR 12.8 billion was lower compared to INR 17.2 billion in last quarter, primarily on account of lower revenue. We continue to progress on our cost optimization exercise to drive further savings and target to reduce our annual operating cost by INR 40 billion over Q4 FY baseline.On a run rate basis, by the end of Q1 FY '22, we have achieved approximately 70% of our target cost savings. CapEx spend was INR 9.4 billion in this quarter. From this quarter, the interest accrued but not due is included as a part of cross debt. A result of gross debt as of June 30,` 2021, was INR 1,915.9 billion, comprising of deferred spectrum payment obligations of INR 1,060.1 billion; and AGR liability of INR 621.8 billion that are due to the government; and debt from banks and financial institutions of INR 234 billion; the cash, and cash equivalents at the end of the quarter were at INR 9.2 billion. As a result, the net debt at the end of the quarter stood at INR 1,906.7 billion.With this, I hand over the call back to Margaret, and open the floor for questions.
[Operator Instructions] The first question is from the line of Sanjesh Jain from ICICI Securities.
A couple of questions from my side. First, on the subscriber addition, we saw a 12 million decline whereas the competition was flattish and Reliance had a very strong addition of 14 million.So there is a shift from, say, the incumbents to operator to Reliance Jio. Is it more of a factor of JioPhone or you -- or there is -- you think it was more of a COVID-related lockdown, delays in recharge, which is hurting subscriber base. Ravinder, you also mentioned that we have seen recovery in July and August.Can you give some color, are we back to the levels of Q1? Or we are still lower than that? And how does the addition look like? So that's my first question.
Sanjesh, thank you very much for the question. So let me start off with your -- the answer on the quarter [ losses ] [indiscernible] and the subscriber losses that we have. So I can tell you that this is certainly a huge impact of the COVID' second wave. As you would recall from the earlier quarter that we had reached a point of continued reduction in the subscriber losses to a point where we had almost reached to a fairly flat situation in Q4 of last year.This severe second wave basically resulted in lots and lots of, as you know, closures, lockdowns. And what we saw was that many of the customers either consolidated their spend. Or in some cases, renewed on lower packs because there are slight lower requirements on usage, for example, if they were together in a family at home. And we certainly also saw, due to the lockdown, delays in recharges that were taking place, which effectively meant that their recharge that maybe lower, there were a few days in between that the miss because of either the lockdowns or other reasons.So those were the primarily the reasons why we saw this loss in not only subscriber numbers, but also in the tertiary, which is what is reflected in the revenue side. I think there were a few things that were a positive sign. First of all, as mentioned earlier, on the 4G side, the subscriber base is very stable. We only saw a decline of 1 million 4G subscribers, which is quite heartening to see. And also at the same time, we saw that the subscribers who were there, were heavily using the network, and quarter on quarter a large amount of increase network size in this quarter due to again the lockdown. And customer engagement and the quality of the network continues to be very, very good.In regards to competitors, honestly, it's hard for me to say about what the competitors are seeing. I think clearly, at least on the Airtel numbers, you can see that the impact of lockdown is evident. It's hard to say what the Jio numbers are. We certainly -- I don't have an explanation for that and probably a more of question for them in any case.Now to the second part of your question, which was around the recovery, yes, actually, as I mentioned earlier on -- in my opening comments, May was the lowest month and the most challenging month. In June, we already started to see recovery and June was better than May. And then we have seen that continued trend go on in July and August. And as more and more of the country is opening up, we expect that trend to be continuing. And I would say that certainly, we are -- well, I say let's say, better than the Q1 numbers that we were seeing in regards to overall market activity, which I think is a very positive sign.
Got it. Got it. 1 related question here on the network and network experience. We have been steadily seen the growth in the data usage on the network. But our mobile broadband side, we are not entirely replacing even the 3G sites we are culling out or we are refarming into 4G. What's the reason for decline in the total mobile broadband size by 5,500, while we are seeing a very healthy 13% quarter-on-quarter data usage growth?
So I think that's a very good question, Sanjesh. Just let me make sure we clarify that how these calculations are done because I think it's important for everybody to understand how these things work. So we shut down a 3G site that -- which is what we announced earlier in my opening comments that we closed down 12,500 sites. 3G mostly works on 2100 spectrum band. And when we -- if we have that on that particular site, we do not have any 4G site, any 4G equipment using that spectrum band. In that case, when we add 4G with that spectrum band, and that shows an addition of a 4G site. If we already have 4G site using the 2100 band in that same actual physical site. And in that case, we just said, 3G was shut down, and we don't show incrementally a 4G site addition.So what you see is actually our 4G site additions went up in the quarter by 6,500. The 3G sites shutdown that took place effectively was 12,500, but that does not mean that our 4G coverage actually went down. It just meant that in those sites where 3G was shut down, more likely than that, there was already 4G there using the 2100 band. So that's why we don't show a increment there.So actually, the site count is not really necessarily on the 4G site is continuing to increase. On 3G site, as soon as the 3G sites shut down, if there's already a 4G equipment there. That just gets utilized, that spectrum gets utilized to existing 4G sites, so it doesn't show up better than anything in the 4G site. Hopefully, that explains. It's a bit complicated.
No, no, I got the point. But you are telling that you have fired so many 2100 earlier now that we are refarming from 3G to 4G, we don't need additional 2100, and we are just firing up more spectrum from the existing BTS. So the pipe has become bigger with the same equipment. Is that what you're inferring?
That's effectively the right way to do it. So the 2100 starts to beam on 4G rather than 3G, which provides a bigger capacity and the better price as you get mentioned. Exactly.
Sanjesh, if I may add, actually, what happened is that in many circles, we have more than 1 carrier of 2100. Generally, at least in many of these circles, at least 1 carrier was continued and 3G until there were significant number of 3G subscribers. As we see city by city that the number of subscribers has come to a very low level, whereby it is possible to shut down 3G, the last carrier of 2100 has been reformed to 4G at the same trend.
Got it. Got it. Just 1 related question. I don't know it could be more hypothetical or we may not have the number, but it will be good if you can give some color. We say that we are good in 16 circle, and we have 450,000 mobile broadband BTS.In the same circle because the remaining 2 operator or Pan India, operator. What should be the comparable mobile broadband site? Are we equal to the competition when it comes to coverage of the 4G or we still lack at some coverage on the 4G versus the other 2 operators? On the like-to-like 16 circle because other 2 operators give us a number for 22 circle.
So without getting into exact details because it's hard to tell because we don't have their numbers on the 16 because they, obviously, deployed at a national level. But I can tell you that our coverage in those 16 circles and number of sites would be quite profitable, in some circles more, in some circle less, depend on the circle.I think we'd be very comfortable. I don't think there is a significant gap that exists in those 16 circles. Although it vary circle by circle. And clearly, in some circles, we will be ahead and in some circles they will be ahead. But at those 16 circular aggregate level, I don't think there's a huge gap between the 2.
Got it. Two questions for Akshaya. One on the debt. Is quarter-on-quarter, our debt has gone up by INR 10,000 crores. So last quarter, including the accrued interest from those, we were at INR 1,803 billion. And this quarter, we are at INR 1,906 billion. Can you walk us through the increase in the net debt over last quarter to this quarter? That's one.
Yes. Shall I answer that first?
Yes. Yes, sure.
So actually, I think until last quarter, we were not including the interest accrued but not due in the debt this time we have included, and that figure has been included for the first time. And I think that figure may be in the ballpark of about INR 60 billion. The remaining about INR 45 billion increase is coming mainly from 2 factors. 1 is that the spectrum, which was won in the March 21 auction that was not recognized as of March '21 that has been recognized. That is about INR 11 billion added and the balance is then also reflecting of the interest, which has been accrued during the quarter on the spectrum as well as the AGR debt.If I were to give you a broad breakup, what has the interest which has been -- which was as a matter of policy not being added, which is now being disclosed in gross debt is about INR [ 16 ] billion. about INR 37 billion is accrual of interest during the quarter and about INR 11 billion is on account of the spectrum relating to spectrum that relating to March '21.
My last question is on 1 of the release measures that's air in the news article which published today, the news agency states that government may reach -- may consider accepting the spectrum back and may look at waivering the liabilities. Do we think we have an excess spectrum in our system to evaluate, if at all, this policy is to be implemented?
Maybe I'll take that, Sanjesh, to answer the question. So I think this idea of taking that spectrum, I mean, I guess there have been some media speculation and so on. So first of all, we would not like to comment on media speculation.The second part is that I think we believe we have adequate spectrum for our customer base, for the plans that we have going forward. There was a recent spectrum auction that, as you're aware, in February, where we optimize our spectrum holdings even further. And I think in that scenario, we see that we have the right amount of spectrum. And we see that this is enough for our growth and at least for a short -- over the next, let's say, a couple of years, this is a sufficient quantity.I think at any point, trying to talk about spectrum return when it doesn't exist as a policy, I think it's just really more media speculation and we prefer not to talk about it.
The next question is from the line of Vivekanand S. from Ambit.
So I have 2 questions. 1 is with respect to the INR 64 billion of potential tax assets that the government owes to Vodafone' India. Is there any update on that from the government? That's 1.And the second question is with respect to the targets you had outlined in September 2020 for March. So you had said that you want to take up 4G population coverage to 1.15 billion. You are still at around 1 billion. Do you want to revise that or potentially give an update on this?
Thank you, [ Vivek ]. So let me answer those in sequence. On the Vodafone' India question regarding the tax, that is actually nothing to do with the company. That is, I guess, a tax matter, an litigation matter between Vodafone Group and the Government of India. So there is no impact of that positively or negatively to Vi. This is a relationship that there and the dispute is between those 2 groups, have nothing to do with Vodafone Idea Limited. So I think it's not appropriate for us to talk about that at all. It's more a question for Vodafone Group.In regards to your second question, which is much more relevant in the targets that we have set up. Yes, at that time, we had set up a target of 1.15 billion. If you remember, along with that, we had also announced that this is tied to the fundraising activities that we were doing. Let me explain how we have looked at that. We were planning on and we completed 1 billion population coverage a couple of quarters ago. And then our focus was to make sure that we have enough capacity there to provide a great customer experience for our coverage level and the incremental coverage of 150 million, which you are referring to, was subject to us being relatively fund raising.As you know that we are still in the middle of fundraising and our fundraising process continues. Any additional coverage improvement will only take place after the funds -- fundraise completes and are deployed to CapEx. Until then, we are focused on delivering our capacity and the coverage that we have, which is 1 billion of the population. Hope this answer to your question.
Actually, Ravinder, I was also curious about the tax-related potential refunds for Vodafone Idea there. During the last quarter, Akshaya has commented that around INR 68 billion was to be received. I think the government had refunded you some INR 15 billion at that point of time. Is there any more money that has come in from the government in respect to the tax refunds?
Yes. So Vivek, in the last quarter, which is the quarter ending June 21, we have received another INR 10 billion of tax refund. So now what is the balance receivable is INR 58 billion. And we continue to pursue, and we do expect that we should get a significant amount of tax refunds in the remaining part of the year. But yes, some of these are based on the year in which the return has filed and there is a process which, or there's a time line to reach assessment and processing of the fund.So those will happen in the normal course. But in addition to the INR 10 billion that we have received today -- in the last quarter, we do expect to receive a significant refund further in the rest of the year.
The next question is from the line of Ashwin Agarwal Ashish [ Newbury Capital ].
My first question is you mentioned you had hiked the 2G rates in some circles. Can you please clarify like in how many circles have you done the hike?
Yes. [indiscernible]. So we have done -- we are almost doing it on a very, very regular basis. We've been kind of doing it progressively. We started off with 2, and we enhance it to 5. And I believe that the latest count and don't hold me exactly to it, I think we're already at about 13 or 14 circles where we've already reached in number. And in the coming weeks, we will eventually go nationwide with it as well.So we are progressively doing it. A substantial number of circles have been done and then a few more will happen and we compare to footprint in the coming [indiscernible].
Okay. And my second question is on the AGR case. I mean, it's a subjective question, but like what do you think. Are the chances of a review petition being successful or a curative petition if you guys go for that?
Yes. So I think clearly, it's difficult to comment on exactly how the court will take it. But maybe I'll take a minute to just explain. We -- our contention is really that in the amount that has been written up in the judgment, there are errors and mistakes, manifest errors and mistakes, calculation errors, arithmetic errors that are there, which need to be fixed.It's not necessarily pointing the finger at somebody to say they made a mistake. It is a complicated let's say, well, not complicated, but there's a lot of data for many, many years, for many circles for many companies. And it is very possible and feasible that these errors could take place over the years in which these calculations are done.So all our intent is to say that we would like the government to fix those errors and mistakes. And I think we have, in fact, sent the details of each of those mistakes and errors to the government. We've compiled it altogether based on the assessments that we received and then provided it to them. And the intent was that we are, all were requesting the Supreme Court is to allow the government to fix those errors and mistakes. So that we -- what I would call proper justice would be rendered because clearly, it cannot be the intent of either the Government of India or the Supreme Court to actually end us -- having us to pay more or twice than what is actually due.Now somehow in our AGR modification application, somehow the court in the judgment felt that we are trying to reopen the judgment, and we are trying to reopen the case and in some ways, trying to challenge what was originally passed. I think we wanted to be very clear, and this is what we have filed in our review petition as well very, very clearly is that, it is not our intent to challenge the AGR definition anymore. It is not our intent to relitigate that matter. That matter is closed.Our intention is for really for these manifest errors to be fixed. And frankly, if we can do a good job last time around and in the modification application. Our hope is that the court will allow us to explain that in a more clear manner. And then allow DoT to actually fix those errors. I just find it -- I find it very compelling that there is no reason why in our country, we should have this type of situation where we are asked to pay many times over, for us something that we have already paid for.So I'm very hopeful that in this petition -- review petition, and we can explain to the court because their point earlier was that somehow we are challenging the original verdict because that is not our intent. And hopefully, that clarity can be provided.As you mentioned earlier, obviously, if somehow this, let's say, review petition gets rejected, then we do have the ability to file a curative petition, which goes in front of a slightly different [ judge ] and we can make that case. I hope it doesn't have to come to that. But if we have to take that step, then certainly, we intend to do so.
Just 1 follow-up. Does the government have any power to take into account these corrections even if the quarter that let you reconsidering, you submitted the proof to them?
Well, in my view, I think the government has the power, eventually through -- the government eventually has the power to run the country and decide what is the right thing for the country impact, if you remember, even in the Supreme Court filing that they had presented a cabinet note on which the details of number of installments and so on that were put in and that was, obviously, exceeded by the cabinet. So I believe the government has the power, although I think it is also helpful if the court agrees that these errors should be removed.
The next question is from the line of Kunal Vora from BNP Paribas.
The first question, is there any update on floor tariffs? Anything which you heard from the TRAI or any discussion with the government on tariffs? And what you thought that is regarding taking the yield in reading tariffs, considering that there are limited options to tariff run rate right now? If you can just answer that 1 first.
Kunal, could you repeat the second part? I got the floor pricing? I didn't get the second part.
Yes. Well, what's your thought is regarding taking yield on raising tariffs. I mean there have been a small tariff moves, but the large 1, which is Unlimited prepaid, somebody has should take lead in the raising tariffs. So what are your thoughts on that? Because you're really fundraising is clearly getting delayed right now.
Yes. Okay. Thank you, Kunal. So let me answer those first. So on the flow pricing, I think we've said it again and again, tariff hikes are some of the most critical items that is facing by the industry right now. We've said that efforts for a fairly long period of time. I think it has been set by all players in the industry as well. And we believe this is really, really important. There's no way the stress in the industry and the overall health of the industry can be improved until these things get solved.If you look at ARPUs, while only our ARPU, which is today at least between the 3 players, lowest would be in those, among those 3, but even for other players, we are looking at something which is in there INR 150 type of a range. And if you think about that and you compare that to 2016, when we were up to [indiscernible] of INR 200. With you adjusted for inflation on that basis, we'll be well [indiscernible] of INR 300. And frankly, that is the kind of ARPU and pricing that we need in the industry to bypass due to survive in longer term, and to and remain healthy and continue to provide great infrastructure in the country.Now we believe the floor pricing is the best way to do that because I think the discipline that is required to maintain a healthy pricing, unfortunately, in our industry has never really been stuck to. So I think floor pricing, we believe, that we take the right way to do it.We also believe that the floor pricing will not have to be a longer-term measure. Doesn't have to be a permanent thing. That can be done in an interim manner, let's say, for a couple of years, and it can be looked at. If the health becomes good and there is a discipline in the industry, there is no reason why pricing cannot be taken off at that point.So we remain optimistic. We are engaged with the government. We have explained to them that this is the right type of ARPUs. This is the kind of action that needs to be taken. I believe the government is considering it seriously, and I hope to see some action on that in the coming weeks and months.Now in regard to your second part, which is taking the lead in tariff, you're right that I think these steps that had been taken are important in some ways, but they are not the biggest one, which is on the Unlimited retail side, which is the bigger part, which I think will eventually have to be addressed through some kind of a floor pricing scenario. But I think from a lead perspective, I think it's important to understand that we continue to take lead in many areas. So for example, enterprise price point that went up from INR 199 to INR 299. Actually, we are the ones who took that first lead on that. We increased that price and that come followed. I know that they announced it before we did. But we just did it. We didn't really announce it. We did it, and then they followed in a few days and then they announced it as well.On the INR 49 to INR 79 on the minimum connectivity charge and down below, they took the lead, and we followed and we are doing circle by circle.For example, on the postpaid family plan, we -- again, we were the first ones to do it, and then they followed. So in some ways, as I've mentioned earlier, we are not stuck up on that peak. We are not going to be the first ones to do it. We are happy to take action. I think we have to do it in along with our current position, the stability of our base, and our revenues that we are trying to achieve as well as with the fundraising efforts that we are trying to do.So I think it's a mixture of that, but slowly, certainly, we have been taking some of these actions, and we will continue to take those as the opportunities arise. But I think, as I mentioned earlier, the best word to make this stick in longer term is floor pricing.
My second question is on postpaid. If you look at last 5 quarters, the total customer base in postpaid has declined by over 2.8 million. Can you explain which segments have been like more prone to churn? Is it mostly machine-to-machine, end-to-end customers? Or is it like corporate or retail, if you can explain like where you're seeing the churn in postpaid right now, over the last few quarters?
Yes. So I think the postpaid churn, I would say it's a little bit in all segments. It's a small amount. It's not that big of an amount, but there is a churn that's taking place. I think due to the pandemic, certainly, we have seen on the machine-to-machine side, especially in the area of point-of-sale machines and so on, those type of consolidation happen, and we saw some churn on the machine-to-machine side that certainly took place.I would say on the enterprise side, on the SME, because of, again, the pandemic and some of the challenges, we have saw some churn there as well, where people decided that they did not -- they were not meeting as many prescriptions because they didn't have that many employees and so on. There was some of that reason why some of those reductions took place as well.And then on retail, I think there continues to be because there's such a significant price gap between prepaid and postpaid today, sometimes for some customers that becomes a preference for us to say, I would maybe lose the flexibility or the benefit of having a postpaid that prefer to have prepaid.So you see some of that, especially, again due to the pandemic and maybe sometimes in different financial conditions. I think this would -- this happens. Although I have to say that most of the impact that you see in the last quarter is really COVID and pandemic-related.If you look at, let's say, what happened in last quarter, where we pretty much had wished to control [indiscernible] flat on postpaid customer base. And so we had -- we were sort of going to the trajectory of improving our postpaid base, and then we have reached upon that part and then we have a little bit of a dip again in Q1. Again, I expect that Q2 would be our revenue where we will seek to start to see better performance in that area.
Understood. Understood. And I just had 1 last question. Regarding the 3G decision, which you are switching off, can they be used for 4G? And how many 3G base stations are still to be switched off? And if you can share your CapEx plans for FY '22?And any thoughts on what kind of 5G investment will be required over the next 2, 3 years?
Maybe I'll take the 5G question, and then Akshaya can talk about the CapEx plan and then the 3G base stations as well. Technically, it depends on the type of radio access network that you had. Some of the radios are already pre 3G and 4G and some of them are only for 3G, which is less certain case. So when we are turning off 3G base stations, effectively, it doesn't necessarily involve a corporate change.We just reformed the spectrum to start using as 4G. As was mentioned earlier, we watch city by city, location by location as the 3G subscribers becomes lesser and manageable. And at that point on that side, we turn off 3G, reform the spectrum and start using on our 4G. That's the easiest and the fastest method and we continue to do that in many of our locations.On the 5G side, I think frankly, it's a bit too early. We believe that, first of all, the spectrum pricing on 5G are way higher than what we need to be for India.And as you know, in the last auction as well, there's no bidding on 5G spectrum. I think some important steps will have to be taken where 5G spectrum cost will have to be reduced because there is really no case for that high spectrum cost.In regards to the 5G equipment itself, many of our -- because of our equipment being the latest, a lot of it is already 5G ready. So it will, of course, require some additional CapEx, but we have been making sure that the technology that we're using are 5G ready. And of course, this is mostly on the radio side, on the core side, there are new 5G technologies that need to be deployed than 5G comes.We believe 5G is still -- use cases for 5G are still a couple of years away in places like India because really the biggest use case for 5G today is to add capacity at a cheaper cost compared to 4G, is the biggest use case that's there outside of India. And I think in India today, given the number and the deployment of 4G that's taking place and the spectrum availability that's there, I think the CapEx cycle will probably stay on 4G for the long hand.Akshaya if you want to please add to the other answer?
Yes. So Kunal, on the CapEx, I think you have seen our CapEx trend for the last 2 quarters. We'll remain ballpark in that range in the -- for the coming couple of quarters, I would say. And I think as we said that in terms of capacity where we already have coverage, we are making the necessary investments, higher investments that we need to make our and expanding the coverage. And that higher level of CapEx would actually depend on the closure of the new funding.So till the time that funding is in place, and I would say for this quarter and the coming quarter, we would expect to remain in the ballpark of the trends that we have seen over the last couple of quarters.
The next question is from the line of Varun Ahuja from Credit Suisse.
I've got 2 questions. First, Ravinder, given that you have raised the [ iterable ] plan on the 2G prepaid side. Last time, if you remember, that happened, when you saw a lot of churn, the first time introduced. So what's your expectation on that front given 1 of your competitors has mentioned that they do expect some churn. So what's your expectation? How do you see response on that front?Secondly, Akshaya, if you can comment about the bond repayment, which are coming? How do you intend to do that given your still in active discussion with them for the fundraise?
On, let me answer the first 1, then we'll hand over to Akshaya. Yes, we do expect some churn in that space. These non-UL customers tend to be, 1, price sensitive; and then b, also sometimes dual sim is really also there. They are using multiple sims. And then when the price goes up, they tend to consolidate either in 1 of the 2 providers that they may have or they tend to, let's say, either not go down to a plan that where they are even consuming less, which obviously is not there. But anyway, we will see churn as a result of that as people make choices. But again, given the fact that this is the price point in the industry of being an essential service, and we would expect that there will be a certain amount of uptake that will take place.In the early days, I can tell you that in the few circles that we've launched, while we do see subscriber losses, we do see a slight revenue upside as well. So I think overall, that's positive and where the industry and it's positive for us. I think the important point is that, frankly, we should -- this is a step in the right direction. And in some ways, customers consolidating their spend on a single provider and that's not necessarily a bad thing in the industry.Akshaya, would you -- for the bond side?
Yes.Varun, so on the question of you're talking particularly about the bond repayment. So I'd say that generally, we are generating positive cash from our operations, which kind of enables us to meet our CapEx requirements, interest payments and smaller principal repayments.We have lumpy bond redemptions in December '21 to February '22 time frame, for which we are basically working on 2 fronts. Firstly, we are engaged with the investors to get new funding, and that discussion is in a very active stage right now. And the second is that we are in parallel discussions with the bondholders also to see what kind of refinancing possibilities are there. And we believe that the combination of these 2, we will be able to kind of meet the requirements of bond repayments, which are falling due from December '21 to February '22.
If I may ask, Ravinder, can you give what are the number of subscribers on this start-up? Any rough indication?
I'm sorry, the number customers on the INR 49 plan?
Yes.
I don't have the number off hand. I'm not even sure if that is a number that we usually give out. But why don't we take that offline and see if we can share some more details.
Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Ravinder Takkar for closing comments.
Thank you, Margaret. So to conclude, these are challenging times for our country. We hope that the disruption post second wave of COVID are behind us as the massive vaccination drive continues. We hope the economic activities continue to pick up in the coming months. We are aware of our duty and the critical role we play in keeping the nation connected, and we remain committed to helping our employees, customers, vendors and all our partners in every possible way. We will keep striving to provide uninterrupted services with an exceptional quality of service to our customers. This is also a difficult phase for the Vodafone Idea family as well. We believe the government recognizes the criticality of this sector, as the industry continues to remain under unsustainable financial to us. We remain hopeful that the government will provide the necessary support to address the structural issues faced by the sector and enable operators to generate returns on their investment.Meanwhile, we continue to remain focused on providing quality service to our customers, sustained intensity in the market to win, as well as work on fundraising to deliver our goals.Thank you all for joining the call. Stay safe and have a good evening. Thank you.
Thank you. On behalf of Vodafone Idea Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.