Vodafone Idea In Talks With Vendors For 5G Rollout Amid Operating Challenges

Vodafone Idea’s chairman Ravinder Takkar also said that the telecom company is committed to boosting 4G coverage and launching 5G services
Vodafone  plans to infuse up to Rs 3,375 crore into debt-ridden Vodafone Idea Ltd.
Vodafone plans to infuse up to Rs 3,375 crore into debt-ridden Vodafone Idea Ltd.

Vodafone Idea (VI) is in discussions with several network vendors for the finalisation of its much-awaited 5G rollout strategy. The company has finished device testing of all major OEMs (original equipment makers) on its upcoming next-gen mobile broadband network, the company informed in its annual report for fiscal 2023.

Vodafone Idea’s chairman Ravinder Takkar also said that the telecom company is committed to boosting 4G coverage and launching 5G services. “The company will continue to make investments for expanding 4G coverage and capacity, especially in its 17 priority circles and introduce 5G services once funding is in place,” Takkar said in VI’s latest annual report.

The joint venture (JV) between UK-based Vodafone Plc and India’s Aditya Birla Group said that it continues to actively engage with lenders and investors for further fundraising. 

According to the latest annual report, Vodafone Idea is working towards rolling out 5G services for its customers and this would witness an increase in consummation of the fundraising. 

In addition, the company has made select 5G clusters in Delhi and Pune where it had partnered with several OEMs to check the compatibility of available 5G handsets. 

VI’s major rivals Bharti Airtel and Reliance Jio already have a headstart on the 5G network. Jio and Airtel have been expanding their 5G coverage base since last October. Both companies are now aiming to launch the next-generation services nationally by December 2023. 

On the other hand, Vodafone is yet to announce its 5G launch due to its delayed external fundraising. The loss-making telecom firm’s efforts to raise around Rs 20,000 crore through a mix of debt and equity have been failing for almost over a year now.

In the financial year 2023, VI lost 17.9 million subscribers, lowering its subscriber base to 225.9 million at the end of March. Of the total subscriber base, the telco’s 4G subscribers increased by 4.5 million to 122.6 million in the reported year.

The company needs fresh capital inputs from its promoters as that is expected to lead to third-party equity funding. This would also prompt the much-needed investments in Vodafone’s 4G network and towards its pending 5G rollout. 

However, that hasn’t happened yet resulting in lenders delaying refinancing of part of its existing bank debt. 

In the March quarter of FY23, the company reported Rs 2.09 lakh crore net debt and a moderate cash balance of Rs 230 crore.

The company’s promoters are expected to invest around Rs 5,000 crore of fresh capital in tranches after the government converted its accrued interest towards AGR arrears into equity in February this year. The government became its biggest shareholder with a 33.1 per cent stake. 

Takkar also stated that telecom tariffs continued to remain unsustainable and needed to hike significantly from current levels to boost overall industry health, and growth and generate reasonable returns for operators to promote investments.

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