Q1 21/22

Aug 16, 2021

Quarterly report

Good afternoon, ladies and gentlemen. This is Margaret, the moderator of your conference call. Welcome to the Vodafone IVA Limited Conference. For the duration of this presentation, all participants lines will be in a listen only mode. After the presentation, a question and answer session will be conducted. We have with us today Mr. Ravinder Thakkar, MD and CEO of Vodafone Idea Limited and Mr. Akshay Munra, 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 expected to focus on the 3 strategic and important 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 deemed therefore in conjunction with the risks that the company faces. With this, I hand the conference call over to Mr. Ravindra Thakkar. 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 30, 2021. A 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 1 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 weekendpartial 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 V app enabled our users to get easy access to information related to vaccine availability. For easy booking of vaccine, V has integrated the COVID app on the We app for its 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 20 fourseven throughout the lockdown to ensure our customers can work, study, transact and get the daily dose of entertainment from the safety of their own homes. With the following number of COVID cases and beginning of unlocking by states, business activity has started to recover gradually. Though the impact continues to remain uneven across circles, we expect the operational and supply chain challenges to normalize in the coming months. Now moving on to our key strategic initiatives. The first one being focused network investments. We continue to follow a focused approach to investments the bias 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 3 gs network to 4 gs. We closed over 12,500 3 gs sites during the quarter, while we added over 6,500 4 gs FPD sites, mainly through the farming of 2 gs and 3 gs spectrum. The process of reforming 3 gs spectrum to 4 gs on majority of our sites in various cities has substantially enhanced the gigabitnet 4 gs capacity in those cities. Overall, broadband site count stood at 447,144, lower than compared to 452,600 and 50 a quarter ago on account of shutdown of 3 gs sites, while we continue to add 4 gs sites. These 4 gs coverage has already crossed the benchmark of 1,000,000,000 Indians 1st 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 food network in the country is justified 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 the world. While we are currently in the middle of our 4 gs CapEx cycle, we have been deploying the equipment, which is 5 gs ready on both radio and core. We have the advantage of having the latest 4 gs equipment and technologies, which are capable of upgrade to 5 gs. Also, we have made substantial progress in deploying several 5 gs ready technologies, such as NASA MIMO, DSR, Cloudification of Core, etcetera. And they are very much central to our strategy for future growth. As mentioned last quarter, we have initiated 5 gs 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 4 gs and 5 gs, cloud and IoT area. Now moving on to market initiatives. With the need for data increasing, we launched and promoted a new campaign focusing on v0 unlimited plans. This campaign highlighted the 3 features that the plan offers, weekend data rollover, lifetime free data from 12 am to 6 am and double data. The 0 unlimited campaign seeks to ensure that the customers thrive in the digital ecosystem and that they do not run out of data on their paths. This unique proposition aims to increase unlimited and 4 gs subscriber base by attracting new users to the real network. We aim to scale up the propositions of high output subscribers to live programs in conjunction with OEMs and NVFCs for 4 gs devices. We have also expanded eSIM technology for new postpaid users in 10 priority circles. We also continue to look for ways to improve ARPU by driving 4 gs dual plan penetration. We have taken several tariff intervention 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 INR199 to INR299. We have increased the entry level non UN prepaid plans from INR 49 to INR 79 in majority of this reference. We have rolled out hikes 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. Thus, we continue to engage with the regulator on flow pricing, which is critical and necessary to improve the overall health of the investment. Now on business services. Business services continue to be one of our key focus area. In We Business, as we progress on our journey from telco to tech co, we continue to strengthen our partnership with our customers with new range of offerings like reintegrated IoT, machine SIP, the cloud firewall service and the B Business Plus of 100 mobility output. We are the 1st and the only telecom operator to provide managed 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 Internet has accelerated growth in digital rate of working for businesses and workloads are increasingly migrating to cloud leading to a demand, rising demand for reliable security solutions. We have strengthened our security portfolio with the launch of V 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 B Business Plus. B 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 Worten 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 the journey of Integrated IoT with proposition of smart infrastructure, smart mobility and smart utilities to address the need of these industries and we'll keep adding to the list. The launch of our integrated IoT solution is a strategic step towards making the business an IoT ecosystem integrator for Indian Enterprises and driving our transformation from telco to telco. Our strategic initiative is driving partnerships and digital revenue streams. We continue to partner with content providers to promote new and engaging content through V 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. I'm happy to announce that we would 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 a music cutting across genre and languages, covering over 15 Indian languages, but also have podcasts and music videos as part of the opera. 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. 1 of the key pillars of BIL 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 through the new age customers. The company has forged partnership with several Internet first companies and plans to onboard more partners under each of these areas to enable re 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 unpacked market. 3 is committed to delivering best in class service to their subscribers and bridging the distant divide that separates urban from dealers. 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. And lastly, on our cost optimization exercise. As you are aware, we target to achieve INR 40,000,000,000 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. Now moving on to operation highlights for the quarter. Revenue for the quarter was RMB91.5 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 $12,300,000 and now stands at $255,400,000 impacted by lockdown and restricted store timings. Our 4 gs subscriber base was relatively resilient at 112,200,000 down 1,000,000 versus Q4 FY 2021. With 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. During 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 payments. Meanwhile, we continue to focus on upgrading more customers to 4 gs plan and devices, which remains a key focus area for us. Now a quick update on other developments. On the ADR matter, as you're aware, we had filed a modification application in the Supreme Court requesting them to allow the DoP to correct the manifest clerical and arithmetic errors in computation of the AGR demand. On July 23, 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 view to manifest errors. Further, Mr. Kumar Mahan Birla has stepped down as Non Executive Director and Non Executive Chairman of the Board. Subsequently, Mr. Himanshu Kapanya has been elected in this place. The Board has also appointed Mr. Sushil Agarwal as the Director. Both Mr. Himanshu Kapanya and Mr. Sushil Agarwal are veterans from the ABG Group and bring in a wealth of experience. So Mr. Bidda has stepped down, he as well as the Ritabirla 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, software 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 customers' ability to recharge, availability of physical recharges and acquisition of new customers was impacted due to lockdown or restrictions in majority of the district during the severe second wave of COVID. Adjusted for NDIS 1.1 6 impact, EBITDA was INR 13,800,000,000 for the quarter. There were one offs of INR 1,000,000,000 in the quarter, primarily related to net work and IT expense and employee costs. Adjusted for one offs EBITDA of rupees $12,800,000,000 was lower compared to rupees $17,200,000,000 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 costs by INR 40,000,000,000 over Q4 FY 2020 baseline. On a run rate basis by the end of Q1 FY 2022, we have achieved approximately 70% of our target cost savings. CapEx spend was INR 9,400,000,000 in this quarter. From this quarter, the interest accrued but not due is included as a part of gross debt. As a result, the gross debt as of June 30, 2021 was INR 1915,900,000,000 comprising of deferred spectrum payment obligations of INR 1060,100,000,000 and ADR liability of INR 621,800,000,000 that are due to the government and debt from banks and financial institutions of INR 234,000,000. Dollars His cash and cash equivalents at the end of the quarter were at INR9,200,000,000 As a result, the net debt at the end of the quarter stood at 1906,700,000,000 dollars 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. The first question is from the line of Sanjay Jain from ICLC Securities. Please go ahead. Thank you. Good afternoon all. A couple of questions from my side. First on the subscriber addition, we saw 12,000,000 decline whereas the competition was flattish and Reliance had a very strong addition of $14,000,000 So there is a shift from, say, the incumbents to operator to Reliance Jio. Is it more of a factor of Jio Phone? Or you or there is you think it was more of a COVID related lockdown, delays in recharge, which is hurting subscriber base? Ravin, you also mentioned that we have seen recovery in July August. Can you give some color? Are we back to the levels of Q1? Or we are still lower than the trend? How does the addition look like? So that's my first question. Sanjesh, thank you very much for the question. So let me start off with your with the answer on the portfolio and the subscriber losses that we have. So I can tell you that this is certainly a huge impact of the COVID second wave. As you would recall, from the earlier quarter, the ASP had reached a point of continued reduction in the subscriber losses to the 4th period, almost reached to a totally flat situation in Q4 of last year. This severe second wave basically resulted in lots and lots of, as you know, closures, lockdowns. And what we saw was that many of the customers either consolidated their spend or in some cases renewed on lower tax because of the political requirements on usage, for example, if they were together in a family at home. And we certainly also saw due to the lockdown delays in recharging that were taking place, which effectively meant that they're recharged, but maybe they were a few days in between that they missed because of either lockdowns for other reasons. So 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 in the revenue part. I think there were a few things that were a positive sign. First of all, as mentioned earlier, on the 4 gs side, the subscriber base is very stable. We only saw a decline of 1,000,000 4 gs subscribers, which is quite hard to see. And 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 increased enterprise in these in this quarter due to again the lockdown. And 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 airtime numbers, you can see that the impact of lockdown is evident. It's hard to say what the geo numbers are. We certainly I don't have an explanation for that and probably a more 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. And then we have seen that continued trend go on in July August. And as more and more of the country is opening up, we expect that trend to be continuing. And I would say that certainly, we are well, let's say, 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. 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 3 gs sites we are calling out or we are reforming into 4 gs. What's the reason for decline in the total mobile broadband side per 5,500 while we are seeing a very healthy 13% quarter on quarter data usage growth? Yes. So I think that's a very good question, Sanjay. Just 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. So when we shut down a 3u site, that which is what we announced earlier in my opening comments that we closed on 12,500 silos. 3 gs mostly works on 2,100 spectrum band. And when we if we have that on that particular site, we do not have any 4 gs site, any 4 gs equipment using that spectrum band. In that case, when we had 4 gs with that spectrum band, then that shows an addition of the 4 gs site. If we already have 4 gs site using the 2,100 band in that same actual physical site, then in that case, we just say 3 gs was shut down and we don't show incrementally a 4 gs site addition. So what you see is actually our 4 gs site addition went up in the quarter by 6,500. The 3 gs site shutdown that took place effectively was 12,500, but that did not mean that our 4 gs coverage actually went down. It just meant that in those sites where 3 gs was shut down, more likely than not, there was already 4 gs there using the 2,100 band. And that's why we don't show an increment there. So actually the site count is not really necessarily on the 4 gs side, it's continuing to increase. On 3 gs side, as soon as the 3 gs side is shut down, there's already a 4 gs equipment there that just gets penalized, that spectrum gets utilized to existing 4 gs sites, so it doesn't show up as a big picture to 4 gs site. Hopefully that explains it's a bit complicated. No, no, I got the point. But we are telling that we have fired so many 2,100 earlier now that we are reforming from 3 gs to 4 gs, we don't need additional 2,100 and we are just firing up more spectrum from the existing PTS. So the pipe has become bigger with the same equipment. Is that what we're inferring? That's effectively the right way to do it. So the 2,100 starts to being on 4 gs rather than 3 gs, which provides a bigger capacity in the better price as you mentioned. Yes, exactly. Got it. Got it. Yes. If I may add actually what happened is that in many circles we have more than 1 carrier of 2,100. Generally, at least in many of these circles at least 1 carrier was continued in 3 gs till there were significant number of 3 gs 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 3 gs. The last carrier of 2,100 has been reformed to 4 gs at the same time. Got it, got it. Just one related question. I don't know. 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 Circle and we have 400 and close to 50 450,000 mobile broadband VTS. In the same circle, because the remaining 2 operator are pan India operator, what should be the comparable mobile broadband site? Are we equal to the competition when it comes to coverage on the 4 gs? Or we still lack some coverage on the 4 gs versus the other 2 operators? On the like to like 16 circle because other two operator give us a number for 22 circle. So 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 declared at a national level. But I can tell you that our coverage in those 16 circles and number of sites would be quite comfortable in some circles more in some circles less than 1 circle. I think we'd be very comfortable. I don't think there is a significant gap that exists in those 16 circles. Although it varies circle by circle, and clearly in some circles we would be ahead, in some circles they would be ahead, but at those 16 circle aggregate level, I don't think there is a huge gap for the 3rd quarter. Got it. Got it. Two questions for Akshay. 1 on the debt. Quarter on quarter, our debt has gone up by INR 10,000 crores. So last quarter, including the accrued interest in all, we were at $1803,000,000,000 and this quarter, we are at $1906,000,000,000 Can you walk us through the increase in the net debt over last quarter to this quarter? That's not the point. Yes. Shall I answer that first? Yes. Yes. Sure. Yes. So 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. And I think that figure may be in the ballpark of about INR 60,000,000,000. The remaining about INR 45,000,000,000 increase is coming mainly from 2 factors. 1 is that the spectrum, which was won in the March 21 auction, that debt was not recognized as of March 21, that has been recognized. That is about INR 11,000,000,000 added. And the balance is then also reflecting of the interest, which has been accrued during the quarter on the spectrum as well as the AGR Got it. Got it. If I were to give you a broad breakup, what has the interest, which has been which was as a matter of policy not being added, which is now being disclosed in gross debt is about $16,000,000,000 About $37,000,000,000 is accrual of interest during the quarter and about $11,000,000,000 is on account of the spectrum relating spectrum debt relating to March 20 or not. My last question is on the one of the relief measures that's there in the news article which is published by the news agency. It states that government may consider accepting the spectrum back and may look at wavering the liabilities. 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. So I think this idea of taking that spectrum, I mean, I guess there have been some media speculation and so on. So 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 had going forward. There was a recent spectrum auction that, as you're aware, in February that we optimized our spectrum holdings even further. And I think in that scenario, we see that we have the right amount of spectrum. And we see that this is enough for our growth and at least for a short for the next, let's say, couple of years, this is a sufficient quantity. I think at any point trying to talk about spectrum return, then 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. Fair enough. That's great. Thanks for answering my all questions and best of luck. Thank you, Sandeep. The next question is from the line of Vijay Karan Iff from Ambit. So I have two questions. One is with respect to the RMB64 1,000,000,000 of potential tax assets that the government owes to Vodafone India. Is there any update on that from the government? That's one. And the second question is with respect to the targets you had outlined in September 2020 for March. So you had said that you want to take up 4 gs population coverage to 1,150,000,000. You are still at around 1,000,000,000. Do you want to revise that or potentially give an update on this? Thank you. Thank you, Vijay. So 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 an indication matter between Vodafone Group and Vodafone and the Government of India. So there is no impact of that positively or negatively to PIL. This is a relationship that and the dispute is between those two groups and nothing to do with Vodafone, IDEA Limited. So I think it's not appropriate for us to talk about it at all. It's more a question for Vodafone II. 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 1,500,000,000 dollars If you remember, along with that, we had also announced that this is tied to the fundraising activities that we were doing. So let me explain how we had looked at that. We were planning on and we completed $1,000,000,000 population coverage a couple of quarters ago. And 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 $150,000,000 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 fund raise are deployed to CapEx. Until then, we are focused on delivering our capacity and the coverage that we have, which is more €1,000,000,000 of the population. Hopefully, that clarifies the question. Actually, Ravinder, I was also curious about the tax related potential refunds for Vodafone Idea, where during the last quarter, Akshay has commented that around RMB68 billion was to be received. I think the government had refunded you some RMB15 billion at that point of time. Is there any more money that has come in from the government in respect to the tax refunds? Yes. So Vivek, in the last quarter, which is the quarter ending June 21, we have received another RMB10 1,000,000,000 of tax refund. So now what is the balance receivable is RMB58 1,000,000,000. And we continue to pursue and we do expect that we should get significant amount of tax refund in the remaining part of the year. But yes, some of these are based on the year in which the return is filed and there is a process which there is a timeline to each assessment and processing of the funds. So those will happen in the normal course. But in addition to the $10,000,000,000 that we have received today and 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 is from the line of Ashwin Azarwal from Newberry Capital. Please go ahead. Yes. Hi. My first question is, you mentioned you would hike the 2 gs rates in some circles. Can you please clarify like in how many circles have you done in the hike? Yes. So we have done we are almost doing it on a very, very regular basis. We've been kind of doing it progressively. We started off with 2, then we enhanced it to 5. But I believe that 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. And in the coming days and weeks, we will eventually go nationwide a bit as well. So we are progressively doing it. Substantial number of circles have been done and then a few more will happen and we'll complete the footprint in the coming months. Okay, thanks. And my second question is on the AGR case. I mean, it's a subjective question, but like what do you think are the chances of a review petition being successful or a cumulative petition if you guys go for that? Yes. So I think, clearly, it's 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, well, not complicated, but it's a lot of data for many, many years, for many circles, for many companies. And it is very possible and feasible that these errors could take place over the years in which these calculations are done. So all our intent is to say that we would like the government to fix those errors and mistakes. And I think we have in fact sent the details of each of those mistakes and errors to the government. We kind of combined it all together based on the assessment that we received and provided it to them. And the intent was that we are 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 would be entered. Because clearly, it cannot be the intent of either the settlement of India or the Supreme Court to actually end us having us to pay more or twice than what is actually due. Now somehow in our AGR modification application, somehow the court in the 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, very clearly is that it is not our intent to challenge the AGR definition anymore. It is not our intent to try to re mitigate that matter, that matter is closed. Our intention is for really for these manifest errors to be fixed. And frankly, we did do a good job last time around in the modification application. Our hope is that the QUIC will allow us to explain that in a more clear manner and then allow DoD 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. So I'm very hopeful that in this petition, review petition, and 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 cumulative petition, which goes in front of a slightly different inch 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 submitted the proof to them? Well, in my view, I think the government has the power eventually through 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. So 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 from the line of Kunal Gaurav from BNP Paribas. Please go ahead. Yes. Thanks for the opportunity. The first question, is there any update on blue tariffs, anything which you heard from the PRAI or any decision with government on tariffs? And what is your thought process regarding taking the yield and leasing tariffs considering that there are limited options to raise funds right now? Chris, you can just answer that one first. So, Puneet, could you repeat the second part? I got the floor pricing. I didn't get the second part. Yes. I mean, like, what's the thought, what is it? We're getting taking lead in dealing tariffs. I mean, there are really small tariff moves, but the large one, which is unlimited prepaid, somebody has to take lead in the dealing tariffs. So what are your thoughts on that? Because you are really for fund raising is clearly selling the lead right now. Yes. Okay. Thank you, Kunal. So let me answer those first. So on the floor pricing, I think we've said it again and again, tariff price 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. And we believe this is really, really important that 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 ARPUs, not only our ARPU, which is today at least between the 3 players, lowest can be in both among those 3. But even for other players, we are looking at something which is in the INR 150 type of a range. And you think about that and you compare that to 2016 when the ARPU was down north of INR 200, if you adjust it for inflation on that basis, we'll be well north of INR 300. So frankly, that is the kind of ARPU and pricing that we need in the industry for the industry to survive Lambda Tron and remain healthy and continue to provide great infrastructure to the country. Now we believe the 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. So I think flow pricing, we believe, is the right way to do this. 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. That can be done in an interim manner, let's say, for a 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 the pricing cannot be taken off at that point. So 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. Now 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 fee pay side, which is the bigger part, which I think will eventually have to be addressed through some kind of a fuel pricing scenario. I think from a lead perspective, I think it's important to understand that we continue to take lead in many AEs. So for example, the enterprise price point that went up from $199 to $29,000,000 Actually, we are the ones who took that first lead on that. We increased that price and Aircom followed. I know that they announced it before we did, but 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 to INR79 on the minimum connectivity charge and non Vuel, they took the lead and we followed and we are being circle by circle. For example, on the postpaid family plan, we again, we were the 1st ones to do it and then they followed. So in some ways, as I've mentioned earlier, we are not stuck up on that peak. We are not going to be the first ones to do it. We are happy to take action. I think we have to do it in 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. So I think it's a mixture of that. But slowly, certainly, we have been taking some of these actions, and we will continue to take those as the opportunities arise. But I think, as I mentioned earlier, the best way to make this ticking on the term is for Fisun. Thanks for the elaborate answer. My second question is on postpaid. If you look at last 5 quarters, the total customer deals in postpaid has declined by about 2,800,000. Can you explain which segments have been like more prone to churn? Is it mostly machine to machine M2M customers? Or is it like corporate or retail? If you can explain like where you are seeing the churn in postpaid right now over the last few quarters? Yes. So 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 machines 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 cannot they were not meeting as many prescriptions 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. And then on retail, I think there continues to be because there's such a significant price gap between prepay 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 that prefer to have prepay. So you see some of that, especially again due to the pandemic and maybe sometimes in difficult financial conditions. I think this would 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, we pretty much have reached a point where you're flat on postpaid subscription. So we had we were sort of going through the trajectory of improving our postpaid base, and then we have reached that pattern, and we have a little bit of a dip again in Q1. Again, I expect that Q2 would be we will see to start to see better performance in that area. Understood. And I just had one last question. Regarding the 3 gs base station which you are pitching off, can these be used for 4 gs? And how many 3 gs base stations are still to be fixed off? And if you can share your CapEx plans for FY 2022? And any thoughts on what kind of 5 gs investments might be required over the next 2, 3 years? Maybe I'll take the 5 gs question and then Akshay can talk about the CapEx plan and then the 3 gs base stations as well. Secondly, it depends on the type of radio access network that you had. Some of the radios are already pre both for 3 gs and 4 gs and some of them are only for 3 gs, which is lesser in case. So when we are turning off 3 gs base stations effectively, it doesn't necessarily involve a corporate change. We just recon the spectrum to start using as 4 gs. As I've mentioned earlier, we watch city by city, location by location. As the 3 gs subscriber base becomes lesser and manageable. And at that point, on that side, we turn off 3 gs from the spectrum it's kept using on 4 gs. That's the easiest and the fastest method, and we continue to do that in many of our locations. On the 5 gs side, I think frankly, it's a bit too early. We believe that, first of all, the spectrum pricing on 5 gs are way higher than what they need to be for India. And as you know, in the last auction as well, there's no bidding on 5 gs spectrum. I think some important steps will have to be taken where 5 gs spectrum costs will have to be reduced because there's really no case for that high spectrum cost. In regards to the 5 gs equipment itself, many of our because of our equipment being combated, a lot of it is already 5 gs ready. So it will, of course, require some additional CapEx, but we have been making sure that the technologies that we're using are 5 gs ready. And of course, this is mostly on the radio side. On the core side, there are new 5 gs technologies that need to be deployed when 5 gs comes. We believe 5 gs is still the use cases for 5 gs are still a couple of years away in places like India because really the biggest use case for 5 gs today is to add capacity at a cheaper cost compared to 4 gs is the biggest use case that's there outside of India. And I think in India today, given the number and the deployment of 4 gs that's taking place and the spectrum availability that's there, I think the CapEx cycle will probably stay on 4 gs for as long as possible. Harshav, if you want to please add the other answers. Yes. So Kunal, on the CapEx, I think you have seen our CapEx trend for the last two quarters. We remain ballpark in that range in the for the coming couple of quarters, I would say. And I think as we said that in terms of capacity where we already have coverage, we are making the necessary investments, higher investments that we need to make are in expanding the coverage. And that higher level of CapEx would actually depend on the closure of the new funding. So 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. Understood. And that's it from my side. Thank you very much, sir. Thank you, Manav. Thank you. The next question is from the line of Varun Ahuja from Credit Suisse. Please go ahead. Yes. Hi. Thanks for the opportunity. I've got 2 questions. First, Ravinder, given that you have raised the entry level plan on the 2 gs prepaid side, last time, if you remember, that happened, you saw a lot of churn the first time you introduced. So what's your expectation on that front, given one of your competitor has mentioned that they do expect some churn? So what's your expectation? How do you see response on that front? Secondly, Akshay, if you can comment about the bond repayment, which are coming? How do you intend to do that given you're still in active discussion with them for the fund, please? So, Gun, 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, 1, price sensitive. And then B also sometimes reduce SIM is really also there. They are using multiple SIMs. And then when the price goes up, they tend to consolidate either in 1 of the 2 providers that they may have or they tend to, let's say, either not go down to a planned device where they are even continuing less, which obviously is not there. But anyway, we will see churn as a result of that as people make choices. But again, given the fact that this is the price point in the industry of being an essential service, I really 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. So I think overall, that's positive over the industry and it's positive for us. I think the important point is that, frankly, we should this is a step in the right direction. And 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 BAM part. Yes. Varun, so on the question of you're talking particularly about the bond repayment. So 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 2 fronts. Firstly, we are engaged with the investors to get new funding and that discussion is in a very active stage right now. And the second is that we are in parallel discussion with the bondholders also to see what kind of refinancing possibilities are there. And we believe in the combination of these 2, we will be able to kind of meet the requirements of bond repayments, which are falling due from December 21 to February 22. Thank you. If I may ask, Rahul, 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 the number that we usually give out. But why don't we take that over the line and see if we can Sure. Sure. Thank you. Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to Mr. Ravinder Thakkar for closing comments. Thank you, Margaret. So to conclude, these are challenging times for our country. We hope that the disruption for a second wave of COVID are behind us as the massive vaccination drive continues. We hope the economic activity of this country 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 the 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, sustained 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 Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your lines.