Vodafone Idea has concluded a $3.6 billion deal with Nokia, Ericsson and Samsung, for the supply of network equipment over a period of three years. The company claims that the deal marks the first step towards the rollout of the company’s transformative three-year capex plan of around $6.6 billion.
The capex programme is directed towards expanding the 4G population coverage from 1.03 billion to 1.2 billion, launching 5G in key markets and capacity expansion in line with data growth. The Company has continued with its existing long-term partners Nokia and Ericsson and also onboarded Samsung as a new partner.
These contracts will allow the Company to quickly capitalize on the latest state-of-the-art equipment to offer enhanced customer experience. Further, the learnings and insights obtained by the vendors in the Indian market over the last two years will enable the company to embark on a more flexible and modular rollout plan by customising the services for all advanced technologies (4G & 5G). In addition, the new equipment will also lead to efficiency gains in energy and thus lower operating costs. The supplies against these new long-term awards will start in the coming quarter. The top priority for the Company is to expand the 4G coverage to 1.2 billion Indians.
Post the recent equity raise of ₹240 billion and additional spectrum acquisition of ₹35 billion in the June 2024 auction, the Company has also executed some quick win Capex, while simultaneously working on concluding these long-term contracts. These quick wins were mainly by way of deployment of more spectrum on existing sites and also the roll out of some new sites. This is resulting in ~15% boost in capacity and an increase in population coverage by 16 million by end September, 2024. We are already witnessing an improvement in customer experience in select geographies where these rollouts have been completed.
Akshaya Moondra, CEO, Vodafone Idea Limited, said, “We are committed to invest in emerging network technologies to provide a best-in-class experience to our customers. We have kickstarted 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. Nokia and Ericsson have been our partners since our inception and this marks another milestone in that continuing partnership. We are pleased to start our new partnership with Samsung. We look forward to work closely with all our partners as we move into the 5G era.”
The Capex is currently being funded out of the equity raise. For the long-term Capex, the Company is in an advanced stage of discussions with its existing and new lenders to tie up ₹250 billion of funded and ₹100 billion of non-fund-based facilities. One of the major steps in this process was the completion of a techno-economic evaluation of the company’s long-term projections by an independent third party, which was recently completed.
