Good afternoon, ladies and gentlemen. This is Margaret, the moderator of your conference call. Welcome to the Vodafone Idea Limited Conference. For the duration of this presentation, all participant lines will be in listen-only mode. After the presentation, a question-and-answer session will be conducted. We have with us today Mr. Ravinder Takkar, MD & 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 informed 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 and must be viewed therefore in conjunction with the risks 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 30th, 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 Akshay to share details on the company's financial performance. The quarter one 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 suit.
There was complete lockdown in majority of the districts while there was weekend/partial lockdown, restricted timing, 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 camps for our employees and their families. The vaccine finder 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 CoWIN app on the Vi app for our 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 their 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. The impact continues to remain uneven across circles, we expect the operational and supply chain challenges to normalize in the coming months. 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 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 are progressively upgrading our 3G network to 4G. We closed over 12,500 3G sites during the quarter while we added over 6,500 4G FTD sites, mainly through reforming of 2G and 3G spectrum. The process of reforming 3G spectrum to 4G on majority of our sites in various cities has substantially enhanced the GigaNet 4G capacity in those cities. Overall, broadband site count stood at 447,144, lower down compared to 452,650 a quarter ago on account of shutdown of 3G sites while we continue to add 4G sites. Vi's 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 4G 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 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 network partners, 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 have also partnered with Cisco to design and build a cost-effective network architecture to drive greater speed to market with emerging opportunities in the 4G and 5G, cloud, and IoT area. 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 three features that the plan offers: weekend data rollover, nighttime free data from 12:00 A.M. to 6:00 A.M., and double data. 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 packs.
This unique 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 through large programs in conjunction with OEMs and NBFCs for 4G devices. We have also expanded eSIM 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 interventions 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- INR 299. We have increased the entry-level non-UL prepaid plans from INR 49- 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 remain the critical factor to revive the sector and the pricing structure has to change where operators have the ability to charge customers for incremental usage. We continue to engage with the regulator on floor pricing, which is critical and necessary to improve the overall health of the industry. On business services. Business service continue to be one of our key focus area.
In Vi Business, as we progress on our journey from telco to techco, we continue to strengthen our partnership with our customers with new range of offerings like Vi Integrated IoT, Vi SIP, Vi Cloud Firewall service, and Vi Business Plus bundled mobility offer. 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 receptionist, lead management, and others. The pandemic has accelerated growth in digital ways of working for businesses, and workloads are increasingly migrating to cloud, leading to a rising demand for reliable security solutions. We have strengthened our security portfolio with the launch of 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 helps businesses strike the right 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 this journey of integrated IoT with proposition of smart infrastructure, smart mobility, and smart utilities to address the need of these industries and will keep adding to the list. The launch of our integrated IoT solution is a strategic step towards making Vi Business an IoT ecosystem integrator for Indian enterprises and driving our transformation from Telco to Techco.
A 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 & 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. I'm happy to announce that we will 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 of music cutting across genre and languages, covering over 15 Indian languages, but also have podcasts 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, 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 VIL 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-based 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 capabilities to offer deep integration with our partners for a differentiated experience, create monetization opportunities, and truly become an integrated digital service provider. 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. Moving on to operation 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 12.3 million and now stands at 255.4 million, impacted by lockdown and restricted store timings. Our 4G subscriber base was relatively resilient at 112.2 million, down 1 million versus Q4 FY 2021. 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 our network. In the 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 trends. 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 in computation of the AGR demand. On July 23rd, 2021, the Honorable Supreme Court rejected the plea by VIL and other telecom operators. Needless to say, we were disappointed by the ruling. We have recently filed a review petition in the Supreme Court clearly indicating that the intent is not for us to challenge the judgment of the court, but to seek corrections in demand due 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 in 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. Though Mr. Birla has stepped down, he as well as the Aditya 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 of their experience and support. On fundraising, we continue to remain in active discussions with potential investors. With that now, I hand over to Akshay, 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. 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 lockdown 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. There were one-offs of INR 1 billion in the quarter, primarily related to network and IP expense and employee costs. Adjusted for one-offs, 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 FY20 baseline. On a run rate basis by the end of Q1 FY22, 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 gross debt. The 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, an 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.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Anyone who would like to ask a question, please press star and one at this time. Ladies and gentlemen, we will wait for a moment for the questions to assemble. The first question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Thank you. Good afternoon, all. A couple of questions from my side. First, on the subscriber addition. We saw 12 million decline, whereas the competition was flattish and Reliance had a very strong addition of 14 million. There is a shift from, say, the incumbents to operator to Reliance. Is it more of a factor of JioPhone or do 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? That's my first question.
Sanjesh, thank you very much for the question. Let me start off with the answer on the subscriber losses that we have. 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. What we saw was that many of the customers either consolidated their spend or, in some cases, renewed on lower packs because of the protocol requirements on usage, for example, if they were together in a family at home.
We certainly also saw, due to the lockdown, delays in recharges that were taking place, which effectively meant that they recharged, but maybe there were a few days in between that they missed because of either lockdowns for other reasons. Those were primarily the reasons why we saw this loss in not only subscriber numbers, but also in the treasury, which is what is reflected there in the revenue part. 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.
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 that took place in this quarter due to, again, the lockdown. Customer engagement and the quality of the network continues to be very, very good. Now, 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. I don't have an explanation for that, and that would be more of a 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. Then we have seen that continued trend go on in July and August. As more and more of the country is opening up, we expect that trend to be continuing. I would say that, certainly, we are well, 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. Thank you. One related question here on the network and network experience. We have been steadily seeing the growth in the data usage on the network, but our mobile broadband sites, we are not entirely replacing even the 3G sites we are culling out or we are reforming into 4G. What's the reason for a decline in the total mobile broadband site by 5,500, while we are seeing a very healthy 13% quarter-on-quarter data usage growth?
Yeah. I think that's a very good question, Sanjesh. Let me make sure we clarify that how these calculations were done, because I think it's important for everybody to understand how these things work. When we shut down a 3G site, which is what we announced earlier in my opening comments, that we closed down 12,500 sites. 3G mostly works on 2100 spectrum band. 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, then that shows an addition of a 4G site. If we already have 4G site using the 2100 band in that same actual physical site, then in that case, we just say 3G was shut down, and we don't show incrementally a 4G site addition.
What you see is actually our 4G site addition went up in the quarter by 6,500. The 3G site 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 not, there was already 4G there using the 2100 band. That's why we don't show an increment there. Actually, the site count on the 4G side is continuing to increase. On 3G site, as soon as the 3G site is shut down, if there's already a 4G equipment there, that just gets utilized. That spectrum gets utilized to existing 4G sites, it doesn't show up as a new thing, a new 4G site. Hopefully, that explains it. It's a bit complicated.
I got the point, we are telling that we have fired so many 2100 earlier. Now that we are reforming from 3G- 4G, we don't need additional 2100, we are just firing up more spectrum from the existing BTS. The pipe has become bigger with the same equipment. Is that what we are inferring?
That's effectively the right way to do it. The 2100 starts to beam on 4G rather than 3G, which provides a bigger capacity and the better pipes, as you mentioned. Yes, exactly.
Got it.
Sanjay, if I may add, actually, what happened is that in many circles, we have more than one carrier of 2100. Generally, at least in many of these circles, at least one carrier was continued in 3G till 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 time.
Got it. Just one related question. 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 circles, and we have 450,000 mobile broadband BTS. In the same circles, because the remaining two operators are a Pan-India operator, what should be the comparable mobile broadband site? Are we equal to the competition when it comes to coverage on the 4G, or we still lack some coverage on the 4G, versus the other two operators? On the like-to-like 16 circles, because other two operators give us a number for 22 circles.
Without getting into the exact details, because it's hard to tell, because we don't have their numbers on the 16, because they obviously declare it at a national level. I can tell you that our coverage in those 16 circles and number of sites will be quite comparable. In some circles, more, in some circles, less. All circles, 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. Clearly, in some circles, we would be ahead, in some circles, they would be ahead. At those 16 circle aggregate level, I don't think there's a huge gap between them.
Got it. Two questions for Akshay. One on the debt. Quarter on quarter, our debt has gone up by INR 10,000 crore. Last quarter, including the accrued interest and all, 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 my first.
Yeah. Shall I answer that first?
Yeah, sure.
Actually, I think until last quarter, we were not including the interest accrued, but not due in the debt. This time we had included, and that figure has been included for the first time. 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 two factors. One is that the spectrum, which was won in the March 2021 auction, that debt was not recognized as of March 2021. That has been recognized. That is about INR 11 billion added. The balance is then also reflecting off the interest which has been accrued during the quarter on the spectrum as well as the AGR debt.
Got it. That's clear.
If I were to give you a broad breakup, what has the interest, which was as a matter of policy not being added, which is now being disclosed in gross debt, is about INR 60 billion. About INR 37 billion is accrual of interest during this quarter, and about INR 11 billion is on account of the spectrum debt relating to March 2021 auction.
Fair. My last question is on one of the relief measure that's there in the news article, which is published by the news agency, says that government may consider accepting the spectrum back, and may look at waiving the liability. 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. I think this idea of taking back spectrum, I guess there have been some media speculation and so on. 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 optimized our spectrum holdings, even further. I think in that scenario, we see that we have the right amount of spectrum. We see that this is enough for our growth and at least for a short, next, let's say, two 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.
Fair enough. That's great. Thanks for answering my whole question and best of luck.
Thank you.
Thank you. The next question is from the line of Vijay Kannan from Ambit. Please go ahead.
Yeah. Hi. Thank you very much for the opportunity. I have two questions. One 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 one. The second question is, with respect to the targets you had outlined in September 2020, for March. You had said that you want to take up 4G population coverage to 1.15 billion. You are still at around billion. Do you want to revise that or potentially give an update on this? Thank you.
Thank you, Vijay. 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 and a litigation matter between Vodafone Group and the Government of India. There's no impact of that positively or negatively to Vi. This is a relationship and a dispute between those two groups and nothing to do with Vodafone Idea Limited. I think it's not appropriate for us to talk about it at all. It's more a question for Vodafone Group. In regards to your second question, which is much more relevant in the target that we had set up. Yes, at that time, we had set up a target of INR 1.15 billion.
If you remember, along with that, we had also announced that this is tied to the fundraising activity that we were doing. Let me explain how we had looked at that. We were planning on, and we completed 1 billion population coverage a couple of quarters ago. Then our focus was to make sure that we have enough capacity there to provide a great customer experience for that coverage level, and the incremental coverage of 150 million, which you are referring to, was subject to us being able to do fundraising. 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 from this fundraise are deployed to CapEx. Until then, we are focused on delivering our capacity, and the coverage that we have, which is over 1 billion of the population.
Hopefully, I've cleared that as the question.
Ravinder, I was also curious about the tax-related or potential refunds for Vodafone Idea, where, during the last quarter, Akshay had 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?
Yeah. Vijay, in the last quarter, which is quarter ending June 2021, we have received another INR 10 billion of tax refund. Now what is the balance receivable is INR 58 billion. We continue to pursue, and we do expect that we should get significant amount of tax refunds in the remaining part of the year. Yes, some of these are based on the year in which the return is filed, and there is a process, or there is a timeline to each assessment and processing of refunds. Those will happen in the normal course. 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.
All right. Thank you. All the best.
Thank you.
Thank you. The next question from the line of Ashwin Agarwal from Newberry Capital. Please go ahead.
Yeah, hi. My first question is, you mentioned you would hike the 2G rates in some circles. Can you please clarify, again, how many circles have you done the hike?
Yeah, sure. We are almost doing it on a very regular basis. We've been kind of doing it progressively. We started off with two, then we enhanced it to five, and I believe at 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 that number. In the coming weeks, we will eventually go nationwide with it as well. We are progressively doing it. A substantial number of circles have been done, and then a few more will happen, and we complete the footprint in a couple of weeks.
Okay, thanks. My second question is on the AGR case. It's a subjective question, what do you think are the chances of a review petition being successful or a curative petition, if you guys go for that?
I think, clearly difficult to comment on exactly how the court will take it, but maybe I'll take a minute to just explain. Our contention is really that, in the amount that has been written up in the judgment, there are errors and mistakes, manifest errors, 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, not complicated, but it's a lot of data over many years, for many circles, for many companies. It is very possible and feasible that these errors could take place over the years in which these calculations are done. All our intent here is to say that we would like the government to fix those errors and mistakes.
I think we have, in fact, sent the details of each of those mistakes and errors to the Government. We've kind of compiled it all together, based on the assessments that we received and then provided it to them. The intent was that all we are requesting the Supreme Court is to allow the Government to fix those errors and mistakes so that the, what I would call proper justice, could be rendered. Clearly, it cannot be the intent of either the Government of India or the Supreme Court to actually end up having us to pay more or twice than what is actually due. Somehow in our AGR modification application, somehow the court, in their 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 clearly, is that it is not our intent to challenge the AGR definition anymore. It is not our intent to try to relitigate that matter. That matter is closed. Our intention is really for these manifest errors to be fixed. Frankly, if we didn't do a good job last time around 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 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 something that we have already paid for.
I'm very hopeful that in this review petition, 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 bench, 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 one follow-up. Does the government have any power to take into account these corrections, even if the court doesn't let you, considering you've submitted the proof to them?
Well, in my view, I think the Government has the powers. The Government eventually has the power to run the country and decide what is the right thing for the country. In fact, 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 were put in, and then that was obviously approved by the Cabinet. I believe the Government has the powers, although I think it is also helpful if the Court agrees that these errors should be removed.
Okay. Thank you.
Thank you.
Thank you. The next question is on the line of Kunal Vora from BNP Paribas. Please go ahead.
Yeah, thanks for the opportunity. The first question, is there any update on flow tariffs, anything which you heard from the TRAI or any discussion with government on tariffs? What are your thoughts regarding taking lead in raising tariffs, considering that there are limited options to raise funds right now? If you can just answer that one first.
Kunal, could you repeat the second part? I got the flow pricing. I didn't get the second part.
What are your thoughts regarding taking lead in raising tariffs? There have been small tariff moves, but the large one, which is unlimited prepaid, somebody has to take lead in raising tariffs. What are your thoughts on that? Your fund raising is clearly getting delayed right now.
Thank you, Kunal. Let me answer those first. On the floor pricing, I think, we've said it again and again, tariff hikes are the most critical item that is facing the industry right now. We've said that for a fairly long period of time. I think it has been said by all players in the industry as well. 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 ARPU, not only our ARPU, which is today, at least between the three players, lowest among those three, and even for other players. We are looking at something which is in the INR 150 type of a range.
You think about that, and you compare that to 2016, when the ARPU was well north of INR 200. If you adjusted for inflation on that basis, it would be well north of INR 300. Frankly, that is the kind of ARPU and pricing that we need in the industry for the industry to survive longer term and remain healthy and continue to provide great infrastructure to the country. We believe that flow 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. I think flow pricing, we believe, is the right way to do it. We also believe that the flow pricing does not have to be a longer-term measure. It doesn't have to be a permanent thing.
It can be done in an interim manner, let's say, for couple of years, and it can be looked at. If the health becomes good and there is discipline in the industry, there is no reason why flow pricing cannot be taken off at that point. We remain optimistic. We are engaged with the government. We've explained to them that this is the right type of approach. 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.
In regard to your second part, which is taking the lead in tariff, you're right that I think these steps that have been taken are important in some ways, but they are not the biggest one, which is on the unlimited prepaid side, which is the bigger part, which I think will eventually have to be addressed through some kind of a flow pricing scenario. I think from a lead perspective, I think it's important to understand that we continue to take lead in many areas. For example, the enterprise price point that went up from INR 199-INR 299, actually, we are the ones who took that first lead on that. We increased that price, and Airtel followed. I know that they announced it before we did. 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-INR 79 on the minimum connectivity charge and non-data, they took the lead, and we followed, and we are doing circle by circle. For example, on the postpaid family plan, we were the first ones to do it, and then they followed. In some ways, as I've mentioned earlier, we are not stuck up on that beat. We are not going to be the first one to do it. We are happy to take action. I think we have to do it 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.
I think it's a mixture of that, but slowly, certainly, we have been taking some of these options and we will continue to take those as the opportunities arise. I think, as I mentioned earlier, the best way to make this stick in the long-term is through pricing.
Sure. Thanks for the elaborate answer. My second question is on postpaid. If I look at last five quarters, the total customer base in postpaid has declined by about 2.8 million. Can you explain which segments have been more prone to churn? Is it mostly machine-to-machine M2M customers, or is it corporate to retail? If you can explain, where we are seeing a churn in postpaid right now over the last few quarters?
I think the postpaid churn, I would say it's a little bit in all segments. It's 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 happened, 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 saw some churn there as well, where people decided that they were not kind of needing as many subscriptions because they didn't have that many employees and so on. I think that there was some of that reason why some of those reduction took place as well.
On retail, I think there continues to be, because there is such a significant price gap between prepaid and postpaid today, sometimes for some customers, that becomes a preference choice to say, "I would maybe lose the flexibility or the benefit of having a postpaid, but I prefer to have prepaid." You see some of that, especially again, due to the pandemic and maybe sometimes in difficult financial conditions. I think 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 reached a point where we were flat on postpaid subscriptions.
We were sort of going through the trajectory of improving our postpaid base, and then we have reached on that platform, and we have a little bit of a dip again in Q1. I expect that Q2 we will seek to start to see better performance in that area.
Understood. I just had one last question. Regarding the 3G base stations which you are switching off, can these be used for 4G? How many 3G base stations are still to be switched off? If you can share your CapEx plans for FY 2022, and any thoughts on what kind of 5G investments might be required over the next two, three 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 for 3G and 4G, and some of them are only for 3G, which is lesser in case. When we are turning off 3G base stations, effectively, it doesn't necessarily involve an equipment change. We just re-farm the spectrum to start using as 4G. As was mentioned earlier, we watch city by city, location by location. As the 3G subscriber base becomes lesser and manageable, then at that point on that site, we turn off 3G, re-farm 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 they need to be for India. As you know, in the last auction as well, there was no bidding on 5G spectrum. I think some important steps will have to be taken where 5G spectrum costs will have to be reduced because there is really no case for that high spectrum cost. In regards to the 5G equipment itself, because of our equipment being the latest, a lot of it is already 5G ready. It will of course require some additional CapEx, but we have been making sure that the technologies that we're using are 5G ready. Of course, this is mostly on the radio side.
On the core side, there are new 5G technologies that need to be deployed when 5G comes. The use cases for 5G are still two 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. 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 a little while. Akshaya, if you want to please add the other aspects of that.
Yes. Kunal, on the CapEx, I think we have seen our CapEx trend for the last two quarters. We'll remain ballpark in that range for the coming couple of quarters, I would say. I think, as we said that, in terms of capacity where we already have coverage, we are making the necessary investments. The higher investments that we need to make are in expanding the coverage.
That higher level of CapEx would actually depend on the closure of the new funding. 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.
Understood. That's it from my side. Thank you very much, sir.
Thank you.
Thank you. Thank you. The next question from the line of Varun Ahuja from Credit Suisse. Please go ahead.
Yeah. Hi. Thanks for the opportunity. I've got two questions. First, Ravinder, given that you have raised the entry-level plan on the 2 GB prepaid side, last time, if you remember, that happened, you saw a lot of churn the first time you introduced. What's your expectation on that front, given 1 of your competitor has mentioned that they do expect some churn? What's your expectation? How do you see response on that front? Secondly, Akshay, if you can comment about the bond repayments which are coming. How do you intend to do that given you're still in active discussion with them for the fundraise? Thank you.
Varun, let me answer the first one, then we'll hand over to Akshay. Yes, we do expect some churn in that space. These non-UL customers tend to be, one, price-sensitive, and then, be also, sometimes a dual SIM is really also there. They are using multiple SIMs. When the price goes up, they tend to consolidate, either in one of the two providers that they may have, or they tend to, let's say, either go down to a plan where they are even consuming less, which obviously is not there. We would see churn as a result of that as people make choices. Given the fact that this is the price point in the industry of being an essential service, we would expect that there will be 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. I think overall, that's positive for the industry and it's positive for us. I think the important point is that, frankly, this is a step in the right direction. In some ways, customers consolidating their spend on a single provider is not necessarily a bad thing in the industry. Akshay, over to you for the bond part.
Varun, on the question of, you're talking particularly about the bond repayments. 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 2021 to February 2022 timeframe, for which we are basically working on two fronts. Firstly, we are engaged with the investors to get new funding, and that discussion is in a very active stage right now. The second is that we are in parallel discussions with the bondholders also to see what kind of refinancing possibilities are there. We believe with a combination of these two, we will be able to meet the requirements of bond repayments, which are falling due from December 2021 to February 2022.
Thank you. If I may ask, Ravinder, can you give what are the number of subscriber on this starter pack? Any rough indication? Thank you.
I'm sorry, the number of customers on the INR 49 plan?
Yes.
I don't have the number offhand. I'm not even sure if that is a number that we usually give out. Why don't we take that offline.
Sure
give you those details.
Sure. Thank you.
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. To conclude, these are challenging times for our country. We hope that the disruption for 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 duress, 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, sustain intensity in the market to win, as well as work on fundraising to deliver our goals. I 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.