By Swati Bhat
MUMBAI (Reuters) – Vodafone Idea of India has finalized a $3.6 billion agreement with leading mobile and network manufacturers Nokia, Ericsson, and Samsung for the supply of equipment over the next three years, according to a statement released to exchanges.
The company stated, “This deal marks the initial phase of our ambitious three-year capex plan of $6.6 billion (550 billion rupees).” The plan focuses on enhancing 4G coverage from 1.03 billion to 1.2 billion, introducing 5G in key markets, and increasing capacity to accommodate data growth.
Vodafone Idea, a merger between Vodafone Group’s Indian division and Idea Cellular from Aditya Birla Group in 2018, has faced losses in every quarter due to market share erosion to larger competitors like Bharti Airtel and Reliance Jio.
Earlier this year, the company issued shares to institutional investors, conducted the largest follow-on public offer in India, and is currently in discussions with lenders to raise approximately $5 billion for the implementation of 5G services, expanding 4G coverage, and regaining market share.
The delivery of supplies under the new contract will commence in the upcoming quarter, with a primary focus on expanding 4G coverage. CEO Akshaya Moondra mentioned, “Current Capex requirements are being met through equity raise. For long-term Capex, discussions are underway with existing and new lenders to secure 250 billion rupees of funded and 100 billion rupees of non-fund-based facilities.”
Last week, the Supreme Court of India dismissed telecom companies’ plea, including Vodafone Idea, to recalculate their government dues, causing a significant drop in share prices. Vodafone Idea shares have declined by over 40% this quarter.
ICRA analysts estimate that Vodafone Idea and Bharti Airtel collectively owe around 1 trillion rupees ($12 billion) in outstanding dues, encompassing spectrum charges and licensing fees.
(Reporting by Swati Bhat; Editing by Tom Hogue)