Vodafone Idea, the country’s third-largest telecom operator by market share, on Sunday said it has signed a Rs 30,000-crore ($3.6 billion) deal with Nokia, Ericsson, and Samsung for the supply of 4G and 5G network equipment over three years. The deal is part of the Rs 55,000-crore capital expenditure (capex) guidance given by the company over the next three years to expand the 4G population coverage from 1.03 billion to 1.2 billion and launch 5G in key markets.
“We have kick-started the investment cycle. We are on our journey of VIL 2.0 and from hereon, VIL will stage a smart turnaround to effectively participate in the industry growth opportunities,” said Akshaya Moondra, CEO of Vodafone Idea. “We look forward to work closely with all our partners as we move into the 5G era,” Moondra added. The company will start getting the equipment from the vendors in the coming quarter. While Nokia and Ericsson have been Vodafone Idea’s network partners for long, the company for the first time has engaged with Samsung.
With Samsung, Vodafone Idea has been conducting network trials in Chennai over the past 12-18 months. In an earlier release, Vodafone Idea talked about expanding Samsung deployments to Karnataka and Bihar circles following positive trial results and performance at par with existing suppliers. The new equipment will also lead to efficiency gains in energy and thus lower operating costs, the company said, adding that it will come up with a more flexible and modular rollout plan by customising the services for all advanced technologies (4G and 5G).
It said the capex is currently being funded out of the Rs 24,000-crore equity raise, which includes Rs 18,000 crore from a follow-on public offer, Rs 2,075 crore from promoters, and the recent preferential allotment of 1.7 billion equity shares worth Rs 2,458 crore to Nokia and Ericsson India as against past payments. For the long-term capex, Vodafone Idea said it is in the advanced stage of discussions with its existing and new lenders to tie up debt funding of Rs 25,000 crore and additional non-fund-based facilities of up to Rs 10,000 crore, it said in a release.
For bank funding, the telecom operator recently submitted its techno-economic evaluation report to banks and financial institutions, containing the evaluation of its long-term projections. The telecom operator has lately deployed additional spectrum on existing sites and rolled out some new sites. The same, it said, has increased the capacity by 15% and improved the population coverage by 16 million as of September-end.
Vodafone Idea has called a conference call with investors and analysts on Monday to provide “an update on recent developments.” The call will be addressed by Moondra and CFO Murthy GVAS, along with the senior management team. This is after the Supreme Court dismissed curative petitions filed by Vodafone Idea and Bharti Airtel, seeking correction in arithmetical errors by the Department of Telecommunications (DoT) in computing their adjusted gross revenue (AGR) dues arising out of a 2019 order.
The dismissal of the curative petition by the SC is a big setback for Vodafone Idea as there’s a huge gap between the DoT’s calculation and self-assessment done by the company with regard to the dues. For instance, DoT has computed the total dues at Rs 58,000 crore, whereas the company’s calculation puts it at Rs 21,500 crore. At Rs 58,000 crore, Vodafone Idea’s AGR dues are the highest among operators, which as of date, after adding interest, has gone up to Rs 70,320 crore.
Two key questions are expected to be raised by analysts at the conference call. The first may relate to the company’s plans to raise Rs 25,000 crore through debt financing. The second question may relate to how the company expects to pay its AGR dues once the moratorium ends in September 2025. Vodafone Idea had earlier said that it might urge the government to extend the same by a few more years or convert the dues into equity.
Once the moratorium on AGR and spectrum dues ends in September 2025, Vodafone Idea will need to pay Rs 29,100 crore by the end of March 2026 and Rs 43,000 crore annually from FY27 till FY31.
