The challenges extend beyond subscription numbers. Vodafone’s losses are expected to touch Rs 30,000 crore in the financial year 2022-23 (FY23). Losses have been getting worse for the company with time, even as its rivals have managed to increase profitability and are making new investments. Vodafone’s losses in FY22 exceeded the FY22 profit of Reliance Jio and Bharti Airtel combined. It is expected to repeat this feat for FY23.
The telecommunications sector has been forced to take on additional debt to invest in infrastructure to roll out the fifth generation (5G) mobile technology. The debt-to-equity ratio, a measure of a company’s indebtedness, is estimated to rise for key players in FY23. The ratio is not meaningful for Vodafone Idea as losses have wiped out its equity.
Charging more for services is the only way that the industry, and Vodafone Idea, can manage to keep their finances manageable. Tariffs are expected to rise in 2023, and again in 2024.
Increasing pricing power in the hands of telecom providers may not help matters.
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