Vodafone Idea earmarks Rs 5,720 crore to roll out 5G wireless network

Plans to use Rs 18K cr FPO's proceeds to upgrade infra, clear deferred payments; govt holding will dilute to 24% from 32% currently

Vodafone Idea (Vi) plans to spend Rs 5,720 crore to launch 5G wireless network in the next 24 months, Chief Executive Officer (CEO) Akshaya Moondra said on Monday. The cash-strapped telecom player will deploy funds raised via the Rs 18,000 crore follow-on public offer (FPO) — the largest in the country to date — for boosting its telecom infrastructure and clearing deferred payments to the government.

Moondra said the company would spend Rs 12,750 crore to buy equipment for expanding its network infrastructure, which includes setting up 4G sites, expanding or adding capacity at existing 4G sites, and setting up 5G sites.  The company hopes to bring 5G access to 40 per cent of its revenue base in the next two years, Moondra said.
 

 

Before 5G services were launched nationally in October 2022, market leader Reliance Jio had said it would cumulatively invest Rs 2 trillion to offer 5G services across the country. The Mukesh Ambani-backed firm boasts 90 million 5G subscribers, who now carry almost a fourth of Jio’s mobility data traffic.
 

Meanwhile, Sunil Bharti Mittal-backed Airtel had outlined plans for additional 5G capex worth Rs 28,500 crore in FY24 and had 75 million 5G users till March this year.

Clearing dues
 

Vi will use the proceeds from the fresh issue of equity shares to pay a few deferred payments for spectrum to the telecom department and tax amounting to Rs 2,175 crore, and the rest will be used for general corporate purposes.  
 

The company said its current 5G spectrum was enough to meet its demand and the telecom player won’t require additional spectrum. “We have engaged with our vendors on 5G for quite some time," said Moondra, adding that once funding was available, the company would expedite placing orders.
 

"A lot of groundwork has happened; the 5G trials have happened,” he added.
 

The executive also said that investor confidence had returned to the company after the government picked up a 32 per cent stake in the company in February last year to become the largest shareholder.
 

The government's post-FPO holding will likely come down to around 24 per cent.

The promoter Aditya Birla group had earlier announced plans to invest Rs 2,000 crore in the company as preferential allotment of shares independent of the FPO. UK-based Vodafone is not investing any additional money in the Indian company.

After the FPO, Vi would also look to raise Rs 25,000 crore as debt from its lenders.

Moondra said the current average revenue per user (ARPU) was the lowest in the world and the telecom player could improve its ARPU by upgrading 2G customers to 4G. Moondra, however, did not give any timeline for tariff corrections.

He also did not indicate whether the government would extend the moratorium on the AGR dues. The AGR dues repayments will have to begin in 18 months.