Vodafone Idea (Vi) is ramping up its efforts to bolster its 4G network infrastructure by engaging in advanced talks with telecommunications giants Nokia and Ericsson. This move comes on the heels of a successful follow-on public offer (FPO) that injected fresh capital into the company, enabling it to pursue extensive network upgrades.
According to a report in The Economic Times (ET), orders for these upgrades are anticipated to be issued in the coming months, potentially including preliminary agreements for 5G deployment. Vi’s recent Rs 18,000 crore FPO has earmarked a significant portion, Rs 13,000 crore, for capital expenditures, with a primary focus on expanding its 4G infrastructure to remain competitive in the market.
Despite this substantial investment, vendors are expected to proceed cautiously, possibly including protective clauses in contracts. Last year, vendors refrained from offering equipment on credit to Vi due to challenges in meeting payment obligations for supplies obtained under earlier contracts.
In addition to the funds secured through the FPO, Vi plans to raise an additional Rs 25,000 crore through debt financing. The recent approval of acquiring Rs 2,075 crore from a promoter entity through preferential share issuance underscores the company’s commitment to fortifying its 4G network, a crucial aspect of its strategy to combat subscriber attrition and compete with rivals Reliance Jio and Bharti Airtel.
Market analysts attribute Vi’s 19% market share decline since the 2018 merger to insufficient network investments. To regain its competitive edge, Vi must first upgrade its existing 4G infrastructure before moving forward with the deployment of 5G technology.
A source quoted in ET highlighted the necessity for Vi to transition its 4G network from Chinese vendors to European ones, given the restrictions on Chinese firms in the 5G space. The company aims to achieve a 40% revenue coverage with 5G within the next 24-30 months, with rollout expected to commence in the next six to nine months.
Unlike Jio, which has opted for standalone (SA) 5G networks, and Airtel, which has launched using the non-standalone (NSA) mode, Vi plans to initially deploy 5G in NSA mode due to lower investment requirements. In NSA mode, existing 4G infrastructure is utilized for delivering 5G services, whereas SA mode requires the establishment of an entirely new network.
Apart from engaging with Nokia and Ericsson, Vi is also conducting trials with open radio access network (RAN) vendors like Mavenir in select regions such as Punjab, indicating the company’s commitment to exploring diverse technological options for its network enhancement.
As Vi gears up for a significant network overhaul, its strategic partnerships and technology choices will play a pivotal role in shaping its competitiveness in the evolving telecommunications landscape, particularly as the industry inches closer to widespread 5G adoption.
