New Delhi: Turning profitable for the first time after entering the country, Vodafone India said mobile tariffs need to go up as input costs are rising, but smaller operators offering cheaper rates are not making it easy.
“Yes, of course, prices need to go up because the industry had lower prices for 17 years…We increased prices by 6.2 per cent last year, which is far below inflation,” Vodafone India Managing Director & CEO Marten Pieters told reporters here today.
He said Vodafone’s revenue per minute (RPM) of about 47 paise is among the highest in the country, but it would be difficult to increase prices because some of the smaller players that offer very low prices are hesitant to increase rates.
“The issue is smaller operators who do not realise 47 paise but lower, maybe 33 paise or lower, and it’s very difficult for us to go to 53 paise if the next guy in the industry is charging 33 paise,” he added.
The Vodafone India head said there needs to be less competition in the market.
“It’s not so much about us increasing the prices but them bringing prices up, that is what should happen in the industry, which is very good for them, but apparently they are hesitant to do it,” he said.
The country’s second-largest operator today reported a 25.9 per cent jump in EBITDA (earnings before interest, taxes, depreciation and amortisation) to Rs 13,398.6 crore for FY14 on growth in data and increased call charges, compared with Rs 10,640.6 crore in FY13.
This is the first time the company has reported a net profit since its entry into the country in 2007.
“Yes, we are net positive in this fiscal but we need to treat this with caution because we are going to next spectrum auction at some point. We continue to invest into network so there is a lot of investment that we do in the next fiscal year and that we need to take into account,” Vodafone India Chief Financial Officer Thomas Reisten said.
The company’s service revenue rose 13 per cent to Rs 37,606 crore for the financial year from Rs 33,281.8 crore previously.
“Data has been great for us with 72 per cent growth on browsing, increase in customer base and minutes of usage per user and price hardening,” Reisten said.
Pieters said the regulatory environment in the country has stabilised, although some issues need to be resolved.
“The situation has basically stabilised and we have seen a more conducive environment but still there are issues which need to be resolved,” he added.