Vodafone Idea recently secure funds via a $2.16 billion follow-on public offer (FPO)
Indian carrier Vodafone Idea has reportedly accelerated negotiations with Nordic vendors Ericsson and Nokia with the main aim of upgrading its 4G network, local newspaper The Economic Times reported.
According to the report, purchase orders for the network upgrade are expected to be issued in June or July and may include some initial orders for 5G equipment.
“The talks have gained pace lately as funding has been ensured. It is expected that the purchase order will be issued after the spectrum auction and elections conclude in June,” the report added, citing an executive with one of the vendors.
Last year, vendors had refused to provide gear on credit to Vodafone Idea, which was struggling to pay for supplies provided under previous contracts due to its critical financial situation.
However, last month, Vodafone Idea said it has concluded its $2.16 billion follow-on public offer (FPO). Vodafone Idea has also recently raised about $648.5 million from 74 anchor investors.
Vodafone Idea recently said it expects to use the equity and debt funding to deploy its 5G service across India within six to seven months of securing the funds; it was also seeking funds to bolster its 4G network and pay tower vendors.
The report also noted that the telco aims to expand its 4G network infrastructure, to be in a better position to compete against rival operators Reliance Jio Infocomm and Bharti Airtel. Analysts said that Vodafone Idea has lost 19% market share since 2018 chiefly due to inadequate 4G network coverage.
The report also highlighted that Vodafone Idea has to first upgrade its 4G network infrastructure across India if it plans to start the deployment of its 5G network. “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,” according to an industry source.
Vodafone Idea is expected to offer 5G technology via NSA architecture as the capex necessary for this network is lower compared to SA networks. Bharti Airtel has rolled out 5G through the NSA mode while Reliance Jio Infocomm launched 5G using SA architecture.
Vodafone Idea expects 5G technology to account for nearly 40% of its overall revenues in 24-to-30 months, according to recent press reports. This goal implies that Vodafone Idea will target 5G coverage in roughly the top 100 cities and towns that generate 40% of its current revenues, a company spokesperson said.
The operator has recently completed its minimum rollout obligation towards 5G deployments in four telecom circles in India. In a presentation for investors, Vodafone Idea, which is a joint venture between U.K. carrier Vodafone and India’s Aditya Birla Group, said its delayed entry into India’s 5G race would help it access the latest advances in 5G technology in a cost-efficient way.
The Indian telco also noted that 90% of its radio gear is already 5G-ready. During the presentation, the carrier also announced plans to refarm its airwaves in the 900 MHz and 2.1 GHz bands as part of plans to expand the telco’s 4G coverage in its 17 priority markets across India.
