Vodafone Idea CEO, Akshaya Moondra, recently revealed that the company is in advanced talks with telecom equipment manufacturers about its 5G deployment strategy. The third largest telecom company in India will comply with the minimum 5G rollout obligations as soon as funding is in place, and will launch services in select cities soon.
5G Minimum Rollout Obligations
Moondra explained that the minimum rollout obligations are not a significant investment and are something that the company will comply with. These obligations state that telecom operators need to offer their services in licensed service areas in both metro and non-metro cities in the first year of spectrum acquisition. The Indian government allocated 5G spectrum to all carriers in August 2022.
5G Deployment Plans
Vodafone Idea is still in the early stages of its 5G deployment, but the company will focus on having a presence in important areas and compete as early as possible, especially since rivals Reliance Jio and Bharti Airtel have already expanded their 5G services. The loss-making carrier, in which the Indian government has a 33% equity, aims to repay existing bank loans on maturity, with new funding concentrated on investments. The company has started discussions with a consortium of banks, and vendor dues are being cleared on priority.
Funding Required
To stay afloat in the competitive telecom market, Vodafone Idea needs to raise INR 20,000 crore in debt and equity from investors for its 5G deployments and operations. Moondra stated that the requirement of the banks was the government conversion, and discussions with their consortium of bankers can progress further now that the government conversion has happened. He further mentioned that the carrier is in talks with the government to get longer payment terms for its outstanding dues from license fees for the December quarter.
Loss and Revenue Growth
For the quarter that ended December 2022, Vodafone Idea reported a net loss of INR 7,988 crore, a year-on-year increase from INR 7,234 crore. The company’s revenues, however, grew by 9.3% to INR 10,620 crore from INR 9,752 crore in the same period due to improvements in the subscriber mix, tariff intervention, and 4G subscriber additions. The company’s average revenue per user (ARPU) increased to INR 135, up by 3.3% from the previous quarter. However, its ARPU is the lowest among its peers, with Airtel having the highest at INR 193 per month.
Future Direction
Moondra hinted that the telecom industry should quickly move towards a structure where consumers would have to pay more for using more services. He stated that the current structure of pricing should evolve to make people at the higher end pay more. On following rival Airtel in raising the entry-level tariff to INR 155 from INR 99, Moondra stated that the company would decide on the steps it would take, but for now, it is on a wait-and-watch mode.
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