Vodafone Idea points out the unsustainable financial constraint of the industry; hope for government support, Telecom News, ET Telecom

Struggling telecoms operator Vodafone Idea pointed to the industry’s “unsustainable financial strain” in its latest annual report and hoped the government would provide the support needed to address “all structural issues” facing the industry. In the chairman’s letter to shareholders, Himanshu Kapania cited persistent challenges in the operating environment, amid “unsustainable pricing” and “hyper-competition” in FY21. Kapania expressed hope that the government will support efforts to generate reasonable returns on massive investments.

“As the industry continues to face unsustainable financial constraints, your company hopes that the government will provide the support needed to resolve any structural issues facing the sector,” said Kapania who was elected by the board of directors. of VIL as non-executive chairman after Kumar Mangalam Birla stepped down in early August.

VIL, which has provided mobile services to the country for 25 years “hopes the government will support its efforts to generate reasonable returns on its massive investments,” he said.

In FY21, the operating environment remained challenging due to unsustainable pricing and hyper-competition, which were further exacerbated by the COVID-19 pandemic, Kapania noted.

While operational challenges remain, the increase in digital penetration that was further boosted during the pandemic remains a huge opportunity for the telecommunications industry, especially when prices pick up in the future, the company said.

VIL “considers that the government recognizes the criticality of the sector and the importance of maintaining healthy competition between private sector operators”.

“… while the company awaits the government’s final decision, it will continue to focus on providing quality service to customers and maintaining market intensity,” Kapania added.

The long-term outlook for the Indian economy remains strong as initiatives such as the privatization of public sector enterprises, asset monetization, implementation of the national infrastructure pipeline, the incentive program linked to the production and the new labor code should be a virtuous circle of investment and growth in the medium term.

The increase in content consumption, especially via video, and the use of social media are driving high demand for broadband internet, and VIL with its strong spectrum portfolio, large investments in networks form of network and fiber optic sites, a wide distribution reach and a strong affinity with customers is “very well positioned” to take advantage of the opportunities presented by the market, the president‘s note said.

VIL is focusing on 4G penetration to increase Average Revenue Per User (ARPU) and strengthen its position in business services, especially the fast growing segment of IoT (Internet of Things) and cloud services.

“Your business continues to focus on the capabilities of its platform to offer deeper integration with partners for a differentiated experience, create monetization opportunities and truly become an integrated digital service provider,” said Kapania.

Along with the cost optimization exercise, these initiatives “will improve revenues and profitability and subsequently strengthen your company’s overall competitive position in the market,” he added.

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