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On the heels of a successful follow-on public offer (FPO), Vodafone Idea (Vi) has stepped up talks with Nokia and Ericsson to upgrade its 4G network.
Orders for these upgrades are expected to be issued in June-July this year, potentially including preliminary 5G agreements as well, according to a report in The Economic Times (ET).
The telecommunications company, which completed an Rs 18,000 crore follow-on public offer (FPO) recently, intends to allocate Rs 13,000 crore for capital expenditures, with over half of it earmarked for expanding its 4G infrastructure.
However, vendors are expected to proceed cautiously and include protective clauses in contracts. Last year, vendors declined to offer equipment on credit to the telecom operator which was facing challenges in meeting payment obligations for supplies obtained under earlier contracts.
Besides the Rs 18,000 crore secured through the FPO, the operator intends to secure an additional Rs 25,000 crore through debt.
Furthermore, the company has already greenlit the acquisition of Rs 2,075 crore from a promoter entity through a preferential share issue. It is prioritising the expansion of its 4G network, a critical aspect of its strategy to mitigate subscriber attrition and rival against Reliance Jio and Bharti Airtel. Experts said the company’s 19 per cent market share decline since the 2018 merger is due to insufficient network investments, the report said.
Before commencing the rollout of 5G, Vi must initially upgrade its 4G network.
A source quoted in ET said, “Chinese vendors have a large share in Vodafone Idea’s 4G network. But since Chinese firms are effectively not allowed in 5G, the telco has to first upgrade the 4G network through European vendors and then plan 5G rollout.”
For 5G, the company aims to achieve a 40 per cent revenue coverage within 24-30 months, with the rollout expected to start in the next six to nine months. The company will provide 5G in the non-standalone (NSA) mode due to lower investment requirements, compared to standalone (SA) networks. Airtel has already launched 5G using the NSA mode, while Jio has opted for the SA mode, the report stated.
In NSA, the existing 4G infrastructure is used for delivering 5G services, whereas the SA mode necessitates the establishment of an entirely new network. Besides engaging with European vendors, Vodafone Idea is also conducting trials with open radio access network (RAN) vendors such as Mavenir in certain regions such as Punjab.
