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Tariff hike to help Vi, but funding for 5g rollout is a problem: Deutsche Bank

The 20-25% prepaid rate hike announced by Vodafone Idea (Vi) will help the telecom service provider as it has remained in a tight spot despite government efforts to support the industry, said Peter Milliken, research analyst, Deutsche Bank.

“It was a deep hole that Vodafone Idea was in. Government efforts provided a stepladder to help them get out of that hole. It was not high enough however, they need more,” said Milliken in an interview with CNBC-TV18.

“The 20% to 25% increase in prepaid rates helps Vi,” he said.

According to Milliken, financing the deployment of 5G will continue to be a challenge for Vodafone Idea.

“This puts Vi in a position where he is positive and still has to pay his interest and that would be the challenge they have of how to do that while deploying a 5G network,” said Milliken.

Milliken expects Jio to eventually increase tariffs. “It is in everyone’s interest to move slowly towards the most standardized set of plans,” he said.

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“We have to wait another 12 months or so, and then maybe push the prices up another 15%, and then we’re in a much more economical position for the industry,” he said.

For the full interview, watch the accompanying video.

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