Vodafone Idea plans to invest Rs 5,720 crore to roll out its fifth generation wireless network in the next 24 months, the company’s Chief Executive Officer Akshay Mundra said today.

Addressing a press conference on the eve of Vodafone Idea’s fund raising of Rs 18,000 crore through India’s largest follow-on public offering (FPO), Mundra said the company will use the proceeds from the fresh issue of equity shares. It is proposed to be used to finance the purchase of equipment. Its network infrastructure expansion is worth Rs 12,750 crore, which includes setting up new 4G sites, expansion/adding capacity of existing 4G sites and setting up new 5G sites. Mundra said the company will cover 40 per cent of its revenue base for 5G rollout in the next 24 months.

The company will also use the proceeds to pay some deferred payments for spectrum and tax of Rs 2,175 crore to the Department of Telecommunications, and the rest will be used for general corporate purposes.

Asked whether the company would bid for the upcoming spectrum auction, Mundra indicated that the company’s existing 5G spectrum is enough to meet its demand and it would not need additional spectrum. “We have been engaged with our vendors on 5G for quite some time. Of course, any order is dependent on funding. So once the funding comes in, our endeavor will be to accelerate the delivery of orders as quickly as possible. A lot of ground work has been done, 5G trials have been done,” Mundra said.

“The government had bought 32 per cent stake in the company in February last year, which brought back investor confidence in the company,” Mundra said.

Existing stakeholders, including the Government of India, which holds 32 per cent stake in the company, will be diluted. After the offer, the Government of India will hold about 24 percent stake in the company. Aditya Birla Group had earlier announced plans to invest Rs 2,000 crore in the company in the form of preferential allotment of shares, which is not part of the FPO. Vodafone is not investing any additional money in the Indian company.

The company is targeting 40 percent of its existing customers to be able to migrate to 5G networks in the next two years. The total customer base as of December last year was 215.2 million. On the other hand, Reliance Jio, India’s largest wireless telephony company, has about 90 million customers who have migrated to Jio’s 5G network, which now carries about one-fourth of Jio’s mobility data traffic and the entire 5G data now Jio has it. 5G and 4G combo core, Reliance Industries said after December quarter results. Bharti Airtel had 50 million 5G customers by the end of September last year, within a year of launching its 5G services.

After the FPO, Vodafone Idea will also look to raise Rs 25,000 crore as debt from its lenders. Asked about the curative petition filed by the company in the Supreme Court on adjusted gross revenue dues to the Government of India, Mundra declined to comment saying the matter was sub-judice in the court.

Asked whether the company would increase tariffs for customers, Mundra said the current average revenue per user (ARPU) is among the lowest in the world, and it could improve its ARPU by upgrading 2G customers to 4G customers. Mundra did not give any timeline for tariff reforms.

Mundra gave no indication whether the government would impose any further restrictions on adjusted gross revenue arrears. Repayment will start after 18 months from now.

first published: 15 April 2024 | 8:05 pm First

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