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 key 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 requested 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 discussions on today's call may include certain forward-looking statements and must be viewed, therefore, in conjunction with the risks that the company faces. With this, I now hand the conference 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 12 November, our Board of Directors adopted the unaudited results for the quarter ending September 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 performance. But before that, let me talk about the reform package announced by the government. The Central Government on 15 September announced a comprehensive reform package to address the severe crises in the telecom industry. We welcome the announcement and appreciate the government's recognition of not just the financial stress in the sector, but also our contribution in keeping the country connected, especially during the pandemic. These reforms will provide immediate relief to the financial sector -- to the financial stress in the sector and reduce regulatory burden on telecom operators. They will further promote healthy competition, protect interest of consumers, ensure liquidity and encourage investments. The announced measures will enable investable funds in the hands of telecom operators for fresh CapEx deployment in building long-term digital infrastructure. With competition and consumer choice, the reform will provide impetus to inclusive development and universal broadband access to all Indians. The moratorium of next 4 years on all government deals will enable us to further boost our 4G coverage and capacity and provide deep rural connect. It will also allow Vodafone Idea to invest in new technologies and services, including 5G when the ecosystem is ready and spectrum is made available at reasonable prices. Through this landmark decision, government has truly demonstrated their commitment to ensuring a healthy market structure of at least 3 private players. Structural reforms, including rationalization of AGR to exclude nontelecom revenues; rationalization of bank guarantees; removal of penalty and interest on penalty on delay in license fee and spectrum usage charge payments; a predictable time line for spectrum auction; supporting spectrum sharing; permission for 100% FDI under automatic routes, among other things, are all steps in the right direction to ease the burden on telcos. These reforms will promote ease of doing business in the country by abolishing some of the archaic processes of telecom business operations. Promoting digitization of KYC process, self-declaration for equipment import and other procedural reforms will be a key to smooth business operations and faster delivery of services to customers. In summary, this historic government announcement will go a long way in making the mobile industry sustainable, allowing the existing telecom operators to invest and compete effectively, thereby supporting the digital needs of 1.3 billion Indians and millions of small, medium and large enterprises. Moving on to our key strategic initiatives. The first one being focused network investments. We continue to follow a focused approach to investments, biased towards our 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 continue to rapidly upgrade our 3G network to 4G. We closed 9,600 3G sites during this quarter, while we added around 10,800 4G FDD sites, mainly through refarming of 2G and 3G spectrum. The refarming of 3G spectrum to 4G on majority of sites in various cities has substantially enhanced the GIGAnet 4G capacity in those cities. Our data capacity is now 2.8x compared to September 2018, just before the merger. Overall, broadband site count stood at 450,481 and lease coverage has already crossed a benchmark of 1 billion Indians last year. It remains our constant endeavor to be the best 4G network in the country. I'm happy to announce that VIL has consistently been leading the lead tables on both data and voice for several months now. We powered by GIGAnet is India's fastest mobile network as awarded by Ookla. We also have the highest rated voice quality as per the country's TRAI MyCall App data for 9 out of 12 months between November 2020 and September 2021. We continue to future proof our network. We have the advantage of having the latest 4G equipment and technologies, which are capable of upgrading to 5G. In addition, we continue to deploy several 5G-ready technologies such as massive MIMO, DSR, cloudification of core, among others. During the quarter, we also conducted 5G trials on government allocated spectrum bands of 26 gigahertz and 3.5 gigahertz, both in Pune and Gandhinagar. We have demonstrated peak speeds of 4.2 Gbps on 26 gigahertz band and 1.5 Gbps on 3.5 gigahertz band. We also tested e-band backhaul spectrum, where we demonstrated a peak speed of 9.8 Gbps. We have forged partnership with several technology leaders, ecosystem players and Indian start-ups for developing a range of use cases relevant for Indian enterprises and consumers such as smart cities, remote health care, remote education, smart automotive, drone-based surveillance, motion capture, gaming, et cetera, to demonstrate effective applications of 5G in India. We have partnered with separate technology leaders and innovators like Ericsson, Nokia, L&T smart world and communication business, Ethonet, [indiscernible] and [ Bizbee ] to develop exciting 5G use cases and are confident that many new cases will emerge over the coming months and years. Moving on to market initiatives. Our unified brand Vi turned a year fold in September 2021 and continues to garner good reception, building brand affinity across all customer segments in the country. Vi was recognized as the buzziest brand during IPL 2021 and also won the cold and silver award in the Indian Digital Marketing Award 2021. We continue to improve ARPU through the adoption of 4G and UL plans by our customers. We have taken several tariff interventions in the last couple of months, such as increasing the entry price on non-UL prepaid plans to INR 79 from INR 49 in a phased manner during this quarter. We have also rolled out hikes in some of our postpaid plans. All these initiatives are ARPU accretive, benefits of which have flown in this quarter results and likely to accrue into next quarter as well. I will take this opportunity to again remind everyone that despite all the recent positive developments on tariffs, tariff hike remain critical to continued revival of this sector. On Business Services. Business service continues to be one of our key focus areas. In Vi business, as we progress on our journey from telco to tech-co we continue to strengthen our partnerships with our customers with a range of new offerings like the Vi integrated IoT, managed SIP, Vi Cloud Firewall Service and Vi Business Plus bundled mobility offering. We are the first and the only telecom operator to provide managed sub-service in India. Our cloud telephony solution is helping SMEs to automate and enhance their customer interactions with features like auto receptionists, lead management and others. In the increasingly hybrid working world, the Vi Business Plus mobility bundling solutions are enabling today's mobile workforce to connect, communicate, collaborate and do a lot more with their postpaid plans. In partnership with Google Cloud India, Vi Business Plus now offers Google Workspace solutions for SMEs and startups in order to help them strike the right balance between business objectives and employee flexibility. The new and emerging cloud and IoT services are central to our business services growth strategy. We continue to derive tremendous synergies from our relationship with Vodafone Group, who are a global leader in the IoT segment. We continue to identify and leverage new opportunities in the IoT space to further strengthen our IoT portfolio, such as our integrated IoT solutions for enterprises, which is a pioneer offer in the market. We have started this journey of integrated IoT with propositions of smart infrastructure, smart mobility and smart utilities to address the needs of these industries and will keep adding to the list. We are partnering with the best and most innovative technology providers to test transformative 5G use cases like smart city, industry 4.0 and health care. Our award-winning digital experience offering such as the Vi App, Vi Business Wireline and Vi Business Mobility are allowing organizations to manage from anywhere and at any time with least manual intervention. Our enterprise digital platform for Vi Business Mobility has been recognized by global jury at ICMG Global Awards 2020 for having the best customer centricity and architectural design. Vi business has been chosen as a preferred partner of choice for IoT, SIP trunking, telecom carrier, mobile access and managed mobility services in the CIO Choice 2021 on the basis of an existing pan-India CIO referral voting process that spans across industry verticals. 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 winning proposition for both us and our customers. At the starting of the year, we had announced a partnership with Disney+ Hotstar to make sure our consumers get access to IPL and T20 World Cup. We had announced post our last quarterly results that we would be launching a music service with some very exciting features. You should see that coming out very, very soon. We also had some very exciting propositions lined up in other categories like gaming, education, skilling and health. While on one side, all these propositions would help us build our digital community, we also have a pipeline of projects to enable monetization of digital traffic. In a recent initiative, we launched Vi Movies and TV content on the Vi App. With this integration, Vi users can watch content directly on the Vi App rather than downloading additional apps. We have seen considerable growth in monthly active users over the last few months, and we should see this further accelerating in the coming quarters on the back of a strong pipeline of digital propositions we have developed. Vi is thus committed to delivering the best-in-class services to all the subscribers and bridging the digital divide that separates urban from the world. We will continue to focus on our platform capabilities to offer a deeper integration with our partners for a differentiated experience, create monetization opportunities and truly become an integrated digital service provider. And lastly, on our cost optimization exercise, we have already achieved approximately 80% of the targeted annualized cost savings of INR 40 billion. Moving on to other highlights for the quarter. Revenue for the quarter was INR 94.1 billion, an improvement of 2.8% quarter-over-quarter, supported by the gradual resumption of economic activity post the severe second wave of COVID, which had negatively impacted us during quarter 1. The subscriber base decline was much lower at 2.4 million. Our subscriber base now stands at 253 million. We continue to witness improving trends in 4G subscribers with a healthy addition of 3.3 million during this quarter, taking the overall subscriber base to 116.2 million. Overall operating momentum improved with higher gross additions and lower churn compared to last quarter. ARPU also saw sequential growth of 5.3% and now stands at INR 109. A quick update on other developments. On the AGR matter, as you are aware, we had filed a review petition with Supreme Court, clearly indicating that the intent is not to challenge the judgment of the Court, but to seek corrections and demands due to manifest errors. The matter is currently pending hearing. On fundraising, the announcement of the government reform package is a significant positive development, alleviating several investor concerns, including the government intention to have at least 3 private players in India and no payout towards the government dues during the next 4 years. We believe there will be renewed interest from investors. We are also in the process of upgrading our business plan. Once it is finalized, we will make suitable disclosures on fundraising. We expect to conclude this exercise during this fiscal year. Now with that, I hand over to Akshaya, who will share the financial highlights for the quarter.
Thanks, Ravinder. A very good afternoon to participants from India and a good morning or evening as applicable to overseas participants. Firstly, our revenue for the quarter improved by 2.8% compared to last quarter, supported by gradual resumption of economic activity post second wave of COVID. Adjusted for IndAS 116 impact, EBITDA was INR 15.6 billion for the quarter. There were one-offs of INR 1.5 billion in the quarter, primarily in other expenses, which were mainly on account of bad debt recoveries, where collections, which were impacted because of lockdown in previous quarters, were collected and also some old receivables were collected and the related provisions were written back. Adjusted for one-offs, EBITDA of INR 14.2 billion was higher compared to INR 12.8 billion in Q1 on account of higher revenue and incremental cost optimization, which was partially offset by increase in customer acquisition costs due to higher gross additions during the quarter and other inflationary cost increases, including annual pay revisions. CapEx spend was INR 13 billion in this quarter. With this H1 FY '22 CapEx stands at INR 22.4 billion. The gross debt as of September 30, 2021, was INR 1,947.8 billion, comprising of deferred spectrum payment obligations of INR 1,086.1 billion, AGR liability of INR 634 billion that are due to the government and debt from banks and financial institutions of INR 227.7 billion. The cash and cash equivalents were at INR 2.5 billion. As a result, net debt at the end of the quarter stood at INR 1,945.3 billion. As covered by Ravinder in his opening remarks, the government reforms package is a significant positive development. We have opted for the deferment of spectrum and AGR dues payable over the next 4 years. This will result in deferment of INR 147.3 billion payable annually towards spectrum acquired through auction till October 2060. For the 4 years, this amounts to a deferment of INR 589.1 billion. For the AGR dues, we are in discussion with the DoT to determine the final amount in line with the Supreme Court judgment. Further, there is an option to convert the interest arising from such deferment into equity. We are evaluating this we'll be reverting on our decision on upfront conversion of interest into equity by the deadline of January 2022. We thus have no demand us payable over the next 4 years towards spectrum and AGR except for spectrum installments pertaining to March 2021 auction, which will start in FY '24. This will provide the needed liquidity to enable us to make further investments. We are also in discussion with banks and investors for further debt and equity funding for investments as well as for repayment of bonds maturing in this financial year. We'll be providing more details on these when the discussions are concluded. With this, I hand over the call back to Margaret and open the floor to questions.
[Operator Instructions] The first question is from the line of Kunal Vora from BNP Paribas.
Yes. First is, you added more than 3,000 towers this quarter, which is the highest we've seen since the merger. Can you explain what happened this quarter? And also if you can share your thoughts on the tower contract renewals? What percentage of your tower contracts are coming up for renewal in second half as well as FY '23? And if there is a potential for cost savings from these renewals?
Thank you, Kunal. I'll take the first question. Actually, the tower increases, there are 2 reasons for it. One, of course, we had incremental 4G sites that have come up, which you may have also seen the broadband sites, which have increased. Also, as we were going through the integration process earlier on and we were developing our grid for our network, generally speaking, we always have this case where we give some tenancies to exit because there were overlaps and then some of them over time, we continue to say we will not exit because the way the grid works out over a period of time. So some of the increases that you see are as a result of us taking away some of those exits that we had earlier planned because the way our network grid has developed and way our traffic has developed. So this would explain the power increases. It is not an exceptional number in this particular quarter. I think it's more related to just the way we have been doing businesses. And in some cases, this time around, we had some exits which we have planned, which we have decided that we want to keep the way the traffic has developed. In regards to tower contracts, I will pass this on to Akshaya to respond to, please.
So Kunal, I will not be able to give you an exact number of the tenancies which are coming up for renewal, but it is right that as far as Indus is concerned, there is a bulk of tenancies, which will come up for renewal at the beginning of FY '23, and these do offer an opportunity for further optimization of our costs.
Yes. Okay. Okay. And just a follow-up on the first one. So is there any increase in your coverage or it's just that some exits which you're looking to do haven't been done and that's why you've seen an increase? So if you can just explain it better.
I would say that the exits, it's not that the exits have not materialized and they will not be done later. I think we have chosen not to exit some of those sites. So that is in plan with our current network planning, so those will stay. I don't think that these sites that we're talking about provide a significant change in the overall network coverage. Our 4G coverage continues to be over 1 billion population of the country. And I think that has been certainly been maintained. I don't think these particular sites that you're talking about provide a significant change in the overall coverage.
Sure. Okay. Second one is on MNP trends which you've seen since September, like here you have announced some focus on MNP offers, and our checks indicate that they were implemented starting middle of September. So have you seen any reduction in variation from the competition and the benefits accruing to you from the sale -- from the MNP calls?
Yes. I think, Kunal, you may have noticed that several weeks ago, the TRAI came out with, let's say, a review of a policy or actually an existing policy, which they reminded every in regards to enforcement of an existing revolution, which says that there needs to be a level playing field for MNP as well as new acquisitions. So I think those regulations exist essentially to make sure that there is no discrimination between a customer who is new to category in terms of the offers that are given to them versus the customers who is porting or doing mobile number portability. Obviously, you want to make sure that they are given same offers and no discrimination is done just because the customer is porting. Now this is an existing policy that TRAI has reminded everybody again, and they will -- they have said that they will enforce this rigorously. We believe that, that is the right policy and should be enforced. And we, in many ways, appreciate the reminder that the TRAI has given on this particular policy. I think we were seeing some fairly aggressive offers on the MNP front earlier in the market, which certainly have become less aggressive and are much more in line with the policy that exists. So we have seen some portability numbers which have reduced as a result of that and some of the aggressive offers that were being made have certainly come down.
Great. Great. Just 1 last question, if I can. Regarding the tariff hike which you've taken in second quarter, INR 49 plan and corporate, how much of the benefit is already accrued and how much more can we expect in third quarters?
Akshaya, do you wish to answer that?
So Kunal, it is difficult to kind of quantify this. But I would say that a large part of the benefit of this tariff increase has come into this quarter, but there will be some spillover which will also come in the next quarter. But largely, it is reflecting in the current quarter.
And how is the consumer behavior since? Have you seen an increase in churn like last time you've done this?
No, actually, Kunal, on this particular one, we have seen a reduction in churn as you've seen compared to last quarter, predominantly because I think these are smaller actions. And in many ways, they are not the brighter, broader tariff hikes that we have been talking about. But overall, we saw churn actually reduced in this particular quarter compared to -- although last time around, there was an impact of COVID the second wave as well. So it's hard to exactly say it will settle, but certainly this quarter, the churn number has been low. Yes.
The next question is from the line of [ Vineet Mangal from Edelweiss ].
I just want to ask like very -- not related to the finances, like what happened to the music streaming services which you said that you're going to launch?
[ Vineet ] as I mentioned in my opening comments, it's a matter of only a few days away. We have done some very interesting things, and I think the offer would be quite exciting. So you would see it very, very soon, so please stay-tuned.
And like I'm just like a retail investor, I'm not like -- I'm not from an institution or like big analyst. Just that I can see like the reputation of the company is not like very good as when you see in the market. So like the You Broadband, like in the starting of the year, like I can see very good marketing strategy was going on, very good plans was going on, but now I don't see any articles from You Broadband-related. So you are not planning to expand it to other cities, Tier 2 cities or like maybe in later stage?
[ Vineet ] I'm not only sure if I can comment on your observations about the reputation not being very good and so on. So maybe something that discussion we can take off-line. And certainly, the intent of this conference call is to not talk about Vi the coverage expansion of You Broadband, but maybe we're happy to take that question off-line. Also, I think that might be worthwhile clarifying because I think you said that you are from a company called Edelweiss. It might be worth clarifying whether you are a associated with them or was that a mistake made in your introduction?
Okay. That's it from the side.
The next question is from the line of Sanjesh Jain from ICICI Securities.
Hello? Can you hear me?
Yes, we can hear you now.
A few of them. First, on the data customer side, if I look at the total data customer, it has broadly remained flattish over -- since our merger. So broadly, we have been able to capture the 2G, 3G data user who are converting into food because our 4G continues to grow. But the overall data customer growth still remain muted or flattish for last 3 years, which also indicate that we are losing some customers who are directly moving from a 2G voice to a 4G. What's our plan here to grow the overall data customer along with the growing 4G customer?
Sorry, Sanjesh, I'm not sure I really fully understand the question. Data customers are...
Close to 136 million, they got -- which used to be 140 million, even at the time of merger. And the 4G has grown. We were at 80s, now we are at 116, but the overall data customers still remain flattish for us.
No, no, see, so Sanjesh, so the strategy of the company is going to move customers from any -- if they were using accidentally small amount of data on 2G because 2G is obviously not designed for data usage. And the idea is to move them over to 4G and charge them the 4G traffic rates and higher ARPUs and so on. That is the strategy that we are working towards. And as you have noted, you see more and more every quarter that strategy to be working and overall 4G subscriber base increasing. And that is the stated strategy, and we will continue to that part. Obviously, from a customer acquisition perspective, converting our existing customers who are currently using 2G into our 4G and keeping them within the family within our company is our top most attempt and we attempt to do that. So more and more of those we can migrate the better it is because these are customers who are already associated with our brand, have the affinity to our brand like experience that they get potentially on 2G, maybe on 3G and keeping them in 4G and they tend to obviously will be the lower churn customers as well. So this is a stated strategy, and we will see more and more of that as we continue to go forward. And hopefully, obviously, we do acquire new customers as well. But overall, the intent is to grow the 4G customer base.
Got it. But any time sooner do we expect the total data customer to start growing in line with our competition who are able to now handsomely grow the total data customer along with the 4G or we are still some time away to see that?
Very -- I mean, it's a -- I think that is our attempt, Sanjesh, to keep on growing that. And as you would have seen over the last few quarters, we are accelerating on that space. And so our endeavor is to continue to accelerate as we build more and more capacity in coverage within our network.
Got it. Got it.
And Sanjesh, if I may add, I think as we invest into covering a higher population, that will definitely be one of the triggers for increasing the data subscribers.
No, we have already crossed 1 billion coverage now on 4G, right? That means we should be covering a large part in our focused circle. I think coverage thing right now, it's fit for us to keep growing. Is that understanding right?
I mean we have -- we were significantly investing in coverage of 4G earlier. For the last year or so, we have not invested so much in 4G coverage. It is our intention to invest in 4G coverage going forward also.
Got it. Got it.
And I said that is only one of the triggers, which will also kind of make that possible. And anyway, Ravinder has answered the other part of your question, but I just wanted to add that this would be one main trigger for increasing the data subscriber.
Got it. Got it. Another similar kind of a trend. Our minutes decline is faster than our subscriber decline. Now that means the customer engaging us lower on the network. What are we -- what am I missing here in terms of understanding because the customer continues to pay us, but the engagement levels are declining. That means they are using more of the secondary SIM, which they already have? Or how should we see this spend because the spend has been persistent now for already a few quarters?
Sanjesh, on that particular topic, there are, as we said, overall, the customers that we report, which are 4G UL customers, those continue to increase. They tend to have higher usage not only of minutes but of data as well. I think there is -- so there is a secular trend that is taking place in that direction. Now what we also noticed at times is that, I think, generally, there is also 4G customers and to also use data more and spend using data. Sometimes they're using data apps to make voice calls as well and so on. So overall, I would say that the biggest indicator to look at is the growth of 4G customer base. The other indicator to look at is overall the growth of engagement that you're seeing on 4G data usage, for example. There, you will see that on a year-on-year basis, we have seen data consumption jump by 27%. And then while minutes have declined as you said, it is not really an indication of engagement. I think engagement is it the overall customer base increasing payments, of course, coming through as well as usage the data or minutes that continue to take place. And there are clearly other mechanisms by which data or voice minutes go through. through some apps and other things. So overall, there is also a change in use of some of that technology as well.
Any other question Mr. Jain?
Yes, yes, I got 2 questions. So one on the 5G trial, Ravinder, can you just elaborate on how has been the 5G trial for us in general and for the industry, what have been the observation on the various brands? How much is India ready for this 5G and this debate on indigenous or disintegrated versus bundle network, if you can just share some thought through your 5G trial touching upon each of these aspect, that will be very useful?And one related question on the backhaul, you made an interesting observation on the E-band and V-band, now does this really solve the problem where the fiber requirement in the future, even on the 5G, assuming these bands are allocated to us to use for backhaul, do you think can be a credible solution for the 5G?
So Sanjesh, I'll start with the last part first. Yes, absolutely. This is the reason we the E-band spectrum that we talked about. It is absolutely a credible solution and certainly something that can be replaced. And hence, we are encouraging in the TRAI consultation that is starting on spectrum to really take a very close look at these bands. And that's why we ask for these bands to be given as part of the trials and certainly, we see that as an alternative to fiber. So that's the last part of your question. On 5G, the -- as I mentioned in my opening statement, in 2 locations, we have done -- we have set up a stand-alone 5G network. We're using the 26 gigahertz as well as 3.5 gigahertz spectrum which has been allocated for us. I will say that from a speed perspective, purely speed, we've been able to demonstrate very, very high speed, again speeds mentioned in my opening comments. So I think that's one part we've been able to show that within India, we can deliver those type of speeds and latency and so on, which I think is very, very positive. Then I think the bigger question and the more important question is what exactly and what specific use cases will be much more relevant in India? And for there, again, I mentioned in my opening comments, several partnerships and alignments that we've done, not only from technology suppliers, but to also other Indian and so on in that entire gamut to come up with several areas of use cases that we will be -- we are currently testing. We will be showcasing actually many of these use cases in the coming weeks. And you will get a chance to hear more about the outcomes that are coming out of that, which I think will give us a very good idea of what the capabilities in the 5G space and what use cases will fly in India. So I think you will see more -- much more information coming out in regards to that. Then I think your last part of your question was around sort of the standards and operand. We believe we absolutely support operand. We believe is an alternative in the industry. or breaking down different parts of the network and building that in a best of breed kind of a manner. I think this is a global effort that is taking place in many, many countries. This has been done. We are, of course, in close contact with our shareholders in Vodafone Group, who are leaders in this space and developing very much the technology. And we believe this is overall the future of open networks to come, especially in 5G, which will enable that going forward.
No, but have we tested any indigenous or right now the testing is on the standard equipment?
No, no. We are testing assessing several things, but we are not willing to announce or we're not able to make that announcement today.
Okay. So the testing will also include some of these indigenous or disintegrated kind of an equipment along with the standard ones?
As I said we are supporters of the operand network piece, which does include different elements rather than just an end-to-end provider.
Got it. Just 1 last question before I end this. Can you give us some sense on the tariff hike where are we, what is stopping us? While now we have been talking about the tariff hike, you did mention about fund raise by end of fiscal, that gives us a clear road map for us. Can you just elaborate on the tariff hike side as well?
Yes. So Sanjesh, as I said, some activity on the tariff hike has already started to happen, which, again, I mentioned and has been talked about in some of the earlier questions as well. And I can tell you that you will not find anybody more vocal about the fact that we do need tariff hikes in the country. We've said it in my opening comments. I've said that earlier on as well. I believe the time for tariff hikes is certainly approaching and my hope is that as a industry, especially after this government reform package has been announced and the government has taken these very, very significant steps to shore up the industry, that tariff hikes, which are the next important step, will also take place soon. So I think for us, particularly as a company, I think we will -- we have said that we will not shy away from raising tariffs. If we are going to raise it, we have to do it with when it is the right time for our company and our customers, and it's something that we obviously watch very closely, although we, of course, don't have anything to announce today.
The next question is from the line of Vivekanand S. from AMBIT.
I hope I'm clearly audible.
Yes, sir, you are.
So I have 2 questions. One is with respect to the offers that some of your rivals have recently come out with to lure new 2G users to 4G, right? So whether it's a subsidized device or whether it's a cashback scheme on various devices purchased by a new smartphone user. What sort of impact are we seeing on our base as far as the upgrades from 2G to 4G go? Secondly, is it possible for you to help us understand the split of spectrum across technology -- across the technologies, basically, the liberalized spectrum, Ravinder I heard that you said in the earnings call in the beginning that most of the spectrum that was earlier in 3G has now been refarmed to 4G and you have deployed the requisite FDD side also. Is it probable to help us with a number in terms of percentage of the liberalized spectrum that is being used for 4G right now?
So I think -- I mean, Vivek, I can answer the question. The second one is very straightforward, which is all 4G spectrum is liberalized. There is no 4G spectrum that is -- by default, I think 4G spectrum -- the you use for 4G has to be liberalized. So I don't think there is a percentage there that we can say that is nonliberalized. So I'm not really sure, maybe I misunderstood your question. And then, of course, bulk of our spectrum is already liberalized as well. There are a few slots which are not administratively were given to us, but bulk of our spectrum is fully liberalized and of course, used for 4G. So that was the first -- your answer for your second question. In regards to the first question that you talked about, I'm assuming that you are referring to the phone launches and the cash-back offers. First of all, I have to say that this is very early days. Those offers have just come out in the market. And it's too early to say if there is any impact at all of those. The other comment that I would make is that the -- I think in general, on the devices itself, it just seems to me like a model for financing because the way that we have done the math, we could see that there's a price of device and then there's some financing costs associated with it that you can buy it on installments or you can buy the device upfront. Frankly, this is today, at least in the market, this is no different than what we offer today in the market we've been offering for a while, financing of devices, and it's available through third-party financing companies that we've worked with very closely that we got tie-ups with. And we also do it for many, many devices. So it doesn't have to be 1 device. We do it for a gamut of devices. The customer's choice is very much there. And also, in our case, we do it not only for new devices, but we also do it for refurbished devices and the models that are there. So I think we offer a significant amount of choice to customers in that space. And certainly, what we see in the market relate doesn't seem to be anything different at this time. Although, as I said, it's too early to say if there's going to be any impact of those just yet.
Vivek, if I can add to the response on the spectrum detail. Just to be clear, we have a total spectrum of 17, 68 megahertz out of which almost everything there is only 30 megahertz, which is administrative spectrum. So almost all the spectrum is liberalized. Now out of that, we have got about 195 megahertz in -- sorry, 195 into 2 in 2100 band. Most of it is now being used for 4G. In some cases, it is also that within a certain circle, some will be used for 3G and some cities may have been refarmed to 4G. So it is not that you can quantify. But the direction is that 3G will over a period of time as the subscribers in every we keep on reducing. This will be refarmed to 4G. So I think that is only a matter of time. So the way to look at it would be that if we kind of assume that in the 2G is there a single carrier of 2G, which is about 10 megahertz per circle into 22 circles, roughly 220 megahertz would be required for 2G. The rest of it, including whatever is being currently used for 3G will be already portable for 4G.
The next question is from the line of Samuel Chen from AllianceBernstein.
Can you guys hear me?
Yes, we can hear you.
Yes, okay. So just 2 questions from my side. I think the industry definitely need improvement. This is not another question about the ARPU, but what I'm really curious is that we've been hearing multiple operators basically waiting for other operators to raise ARPU. But recently, one of your competitors has somewhat loosened their stance and mentioned that they are looking to achieve a certain level of ARPU by a certain time line. Is it my understanding that Vodafone Idea will more likely to follow if your competitors are raising ARPU first or would you be more likely to take the first step?
Well, I mean, I think we've been fairly clear earlier that we are not in a situation where we say we will only follow or we will be always the first one to do. I think we believe that it is the right time for our company and for our customer base, we will make that tariff increase. And has been evident, we have been slowly doing that. As mentioned earlier in my opening comments, both slightly for prepaid customers as well as for some of the postpaid customers, both in the family plan area as well as in the enterprise area. So I don't think it is a question of whether we will follow somebody. I think we will do it when it is the right time for our company. I think what others decide to do or what they choose to do, obviously, it's in their prerogative and it's difficult for me to comment on their plans.
Okay. All right. The second question is on the 5G spectrum. Obviously, the price was -- the previous reserve price was very high. I think TRAI is currently reviewing the price at the moment. What's your -- would you guys me discuss what your 5G spectrum strategy is, let's say, if the price stay the same or if the price goes for a significant discount? Just kind of general color would be great.
No, I think if the price remains the same, I expect that the outcome of any spectrum auction will be the same as last time, which is the spectrum goes unallocated and there are no buyers for that spectrum. So I assume that the price will have to decline. We've been saying, as everybody else externally have been saying as well that the prices are too high and they need to come down. And really, so our bidding strategy and how much spectrum we get will, of course, be dependent on the pricing. But as of now, the pricing market that's available, unless we come out with new pricing from TRAI, we believe it's too expensive and hence, the auctions have not been successful earlier.
The next question is from the line of Aditya Bansal from Nomura.
Just wanted to check if we need to provide any additional bank guarantees for already moratorium on the spectrum dues? If not, what happens to the existing bank guarantees that we have submitted for spectrum dues?
So Aditya, we -- in fact, the cabinet reform package is actually going to reduce the number of bank guarantees that the government holds. So there is clearly a reduction and reconciliation where they will bring down on the performance-based charities, the amount will come down to 20% of what it is today. And that process is already starting. And then on the spectrum does itself, because there are no spectrum payments to be made for the next 4 years. There is essentially no requirement for bank its until a period of time that those spectrum views are deal, which will be before the fourth year. So the requirements today are that the general bank entries need to be given a year prior to when the payments are due. So since the moratorium is for 4 years, we believe that there is no bank guarantee requirement for the next certainly 3 years until the payments become due. And so we expect that those bank guarantees will be returned as well, the spectrum bank guarantees to be returned as well. The amount of the bank guarantee when they have to be paid will depend, of course, on the spectrum installments, and that, of course, depends on the amount that you have to pay basis Vi the choices that you make in regards to the conversion of interest into equity and so on. So I think those decisions will drive the quantum. But we don't believe that there is any bank guarantee requirement for spectrum for the next 3 years up until the moratorium period comes to an end or even before the moratorium period comes to an end.
So have you heard anything from duty on the return of the bank guarantees or is it our understanding on the same?
Yes. No, I think they are working on it, and they're progressing it. It's a big -- we've been giving bank guarantees for so long. There's so many spectrum, so many plans and all the different circles. And I think it's a monumental task for them to reconcile and return those appropriately. I'm sure that those process will start fairly soon.
Another one was we have large debt repayments, which are coming due over the next few months. So what are the options available with the company to service them? Could you elaborate on this?
Akshaya, could you please comment on that?
Yes. Yes, Aditya, so as I mentioned in my opening remarks that we are in discussions with both our banks and investors for raising both debt and equity. These discussions also include some kind of arrangement of funding to be able to meet the immediate maturities of debt, which are coming up in FY '22, the remaining part of '22. So we are working on this. We are in fairly advanced stages of discussion with our bankers, and we should have the conclusion soon.
Sure. And lastly, are we looking at any handset tie-up to ring-fence our own feature phone subscribers?
Aditya, see our strategy on handset has been very clear, which is, today, we have arrangements with several providers, both handset manufacturers as well as with financing companies and we win that tie up together in the form of bundling them together, which can be purchased by our customers in the form of installments through financing. We believe that is the best model because it provides choice to the customers on not only the type of devices and price points that they want to use. So if somebody wants a INR 10,000 device versus a INR 15,000 versus INR 20,000 or INR 8,000, that's the choice that they can make and then they can appropriately finance that. And of course, it also depends on the type of handset that they are doing. We the best option and we are currently offering that in the market. And we offer that to our 2G customers who are looking to either get into the category going into 4G or existing 4G customers who are looking to upgrade to potentially a more, let's say, a higher-spec device in that. So we think that is the right strategy, and we will continue to do that. So in our pie, it is with many different handset manufacturers and at the same time with multiple financing companies to allow choice to customers. I also mentioned we are also have tie up on refurbished handsets, which also provide a great opportunity to customers who are looking to get into this category for the first time as well.
Ladies and gentlemen, due to time constraints that was the last question. I now hand the conference over to Mr. Ravinder Takkar for closing comments.
Thank you, Margaret. So we hope that the disruptions post second wave of COVID are behind us as the massive vaccination drive continues. We are aware of our beauty and the critical role we play in keeping the line connected and we will keep on striving to provide uninterrupted services while maintaining an exceptional quality of service. We sincerely appreciate the government's recognition of the criticality of the telecom sector and the support provided by them to address several long-standing issues faced by the sector. We will now focus on achieving our strategic goals with renewed vigor and with clear intent to improve our competitive position in the marketplace. I want to thank you all for joining the call. Please stay say, 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.