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Vodafone Idea, India's third-largest telecom operator, has announced a significant Rs 30,000 crore ($3.6 billion) deal with Nokia, Ericsson, and Samsung for the supply of 4G and 5G network equipment over the next three years. This investment is a crucial step in the company's ambitious plan to expand its 4G coverage and launch 5G services in key markets.
The deal is part of Vodafone Idea's Rs 55,000 crore capital expenditure (capex) plan, which aims to increase its 4G customer base from 1.03 billion to 1.2 billion and introduce 5G services. The company's CEO, Akshaya Moondra, highlighted the strategic importance of this investment, stating that it marks the beginning of Vodafone Idea's transformation into 'VIL 2.0' and a commitment to effectively capitalize on industry growth opportunities. The company's commitment to collaborating with its partners in the 5G era was also emphasized.
This deal marks a significant shift for Vodafone Idea, as they have partnered with Samsung for the first time. Previous network trials conducted with Samsung in Chennai over the past year and a half have proven successful, leading to the decision to expand Samsung deployments to Karnataka and Bihar. The new equipment is expected to enhance network efficiency, leading to lower operating costs. Vodafone Idea plans to leverage this investment to implement a more flexible and modular rollout plan, customizing services for both 4G and 5G technologies.
The financing for this capex will come from a combination of equity and debt. The company has already raised Rs 24,000 crore through a follow-on public offer, promoter contributions, and a preferential allotment of shares to Nokia and Ericsson. To further secure funding, Vodafone Idea is in advanced discussions with existing and new lenders to raise Rs 25,000 crore in debt financing, along with an additional Rs 10,000 crore in non-fund-based facilities.
The recent investments in network infrastructure have already yielded results. Vodafone Idea has reported a 15% increase in network capacity and a 16 million increase in population coverage as of September-end. The company's performance, and its plans to address its significant AGR dues, will be discussed in a conference call with investors and analysts scheduled for Monday.
The company faces significant challenges, particularly the Rs 58,000 crore AGR dues it owes the government. The Supreme Court's dismissal of curative petitions filed by Vodafone Idea and Bharti Airtel regarding the AGR calculation presents a major obstacle for the company. The significant gap between the DoT's calculated dues and the company's self-assessment underscores the urgency of finding a solution.
Analysts are expected to address two key questions during the conference call. First, they will inquire about the company's strategy for raising the Rs 25,000 crore through debt financing. Second, they will seek clarification on how Vodafone Idea plans to repay its AGR dues after the moratorium ends in September 2025. The company's ability to secure funding and manage its financial obligations will be crucial for its future success.