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Vodafone Idea Invests Rs 5,720 Crore to Bolster 5G and 4G Networks in India

vodafone idea

In a strategic move aimed at bolstering its network capabilities, Vodafone Idea (Vi) has allocated ₹5,720 crore for the rollout of 5G services and the enhancement of its existing 4G network. The cash-strapped telecommunications company aims to address subscriber churn and modernize its 2G base, which currently contributes lower value to its revenue stream.

Key Highlights of Vodafone Idea:

  1. 5G Rollout and Coverage:

    • Vodafone Idea plans to bring 40% of its existing revenue base under 5G coverage within the next 24-30 months.
    • The allocation of ₹5,720 crore from the ₹18,000 crore raised through India’s largest follow-on public offer (FPO) will support the initial phase of 5G deployment.
    • The telco aims to strengthen its position in the emerging 5G landscape, positioning itself for the future.
  2. 4G Network Enhancement:

    • Vodafone Idea recognizes the importance of its 4G network, which serves as the backbone for its services.
    • The company will invest in refarming the 900MHz and 2100MHz spectrum to improve coverage.
    • Additionally, Vi plans to expand 4G population coverage in 17 priority circles, ensuring seamless connectivity for its users.
  3. Conversion of 2G Users to 4G:

    • Approximately 42% of Vi’s subscriber base still relies on 2G technology.
    • This 2G user segment has been a challenge for Vi’s average revenue per user (ARPU) growth.
    • By upgrading these users to 4G, Vodafone Idea expects a significant ARPU improvement, as unlimited data plans tend to yield nearly three times higher revenue.
  4. Government Support and Equity Dilution:

    • The Government of India, as the largest shareholder of Vodafone Idea, holds around 32% of the company.
    • Post-equity dilution in the current FPO, the government’s share will reduce to 24%.
    • This reduction allows flexibility for further reforms and financial support in the future.
  5. Investor Confidence and Funding Initiatives:

    • Vi’s FPO has garnered strong investor confidence, with a promising lineup of anchor investors.
    • Debt conversion into equity has played a crucial role in boosting investor sentiment.
    • The successful completion of the ₹20,000 crore equity round, including promoter infusion, positions Vodafone Idea for debt funding of ₹25,000 crore.

Vodafone Idea’s commitment to network expansion and technological advancement underscores its determination to remain competitive in India’s dynamic telecom industry. As the company navigates its financial challenges, the allocation of funds for 5G and 4G network development signals a strategic shift toward growth and innovation.

Disclaimer: This news article is based on publicly available information and does not constitute financial advice or investment recommendations.

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