Vodafone Idea on Wednesday outlined a three-year turnaround road map anchored around a Rs 45,000-crore investment plan, as it seeks to shift from balance sheet stabilisation to growth. The company said the capital infusion is aimed at delivering double-digit revenue growth, tripling Ebitda and returning to subscriber additions over the medium term.
The company management said the next phase of its strategy is focused on rebuilding competitive strength across network quality, customer experience and coverage depth, after several years of constrained investment.
“For the longest period of time we have been pretty inconsistent as far as the investment is concerned. What has changed is the place that we stand — where we were standing four quarters back, and where we are standing today is a very different place,” Chief Executive Abhijit Kishore said.
Debt Funding Plans
The telco continues to look for a 25,000-crore debt raise to fund this planned investment. Another 10, 000 crore, the management said, will be of a non-funded facility. Vodafone Idea, however, ruled out raising funds through equity dilution for now.
Sushil Agarwal, Group CFO Aditya Birla Group who was present at the earnings conference, reiterated support for the telco as it embarks on its three-year growth plan. Aditya Birla Group is among the promoters.
“We have invested Rs 27,000 crore in the last few years. That itself gives a message that (the) promoters always have remained confident, they’ve invested and would make sure that if there is a need, they support (the) company,” Agarwal said. He also ruled out the possibility of the government’s equity holding increasing beyond 49% in Vodafone Idea.
Priority Market Focus
Of the Rs 45,000-crore planned investment, a large portion will be directed towards expanding and strengthening the radio access network, including coverage parity in priority circles, capacity augmentation and deeper indoor coverage. In terms of market focus for investment, the telco will continue to tap into its priority circles.
“In all the 17 priority markets which contribute to 99.2% of (the) revenue, (Vodafone Idea) will have absolute parity with the competition,” Kishore said.
On tariffs, Vodafone Idea reiterated that industry tariffs in India continue to be structurally low relative to global benchmarks and the level required to sustain long-term capital investment.
Kishore added that recent improvements in average revenue per user (Arpu) demonstrate customers’ willingness to absorb rational price increases when accompanied by better service quality, though the onus of taking the lead on price correction lies with the market leader.
5G Rollout Expansion
Vodafone Idea said it will continue expanding its 5G footprint across priority markets scaling from the current 43 cities to add another 100 cities over the next couple of months.
Kishore also expressed Vodafone Idea’s plans to foray into the fixed wireless access (FWA) segment, another area where peers Reliance Jio and Bharti Airtel have a head start. The telco is exploring opportunities to tap into the small offices and home offices segment.
“I think they should welcome us with open arms. They have been having a duopoly. We are a very formidable, strong promoter backed organisation with extremely good, excellent execution capability which was only not able to perform because of the AGR overhang,” Kishore said when asked about the competitors’ reaction to Vodafone Idea’s aggressive growth strategy.
He added that the India is large market and can accommodate three players. “We are absolutely in the market to give them a tough competition,” he quipped.