Late entry into 5G services allowing cost efficiency: Vodafone Idea

In an investor presentation, the telco said it has been able to incorporate the latest tech as a result

A late entry into 5G services is helping Vodafone Idea (Vi)  avail latest advanced technology products and help it cut costs, the telecom operator has told potential investors.

 

Its Disaggregated Radio Access Network (RAN) is bringing cost efficiency, new capabilities and new service offerings, Vi has said in an investor presentation submitted to the exchanges on Wednesday.

 

Vi launched commercial 5G services last month in Mumbai, nearly two and a half years after rivals Bharti Airtel and Reliance Jio.

 

Subsequent roll outs are planned for Delhi, Bangalore, Chandigarh, Patna and Mysore by April end. In its presentation, the telco said up to 90 per cent of TDD radios are 5G ready, while all new basebands are 5G capable. TDD is a method of duplexing (simultaneous two-way communication) where uplink (device to network) and downlink (network to device) transmissions occur on the same frequency band, but at different time slots.

 

 

However, operational conditions remain challenging with the company being the largest operator in just 2 telecom circles, Kerala and Mumbai. It is the second largest operator in just one circle: Gujarat. In 14 of the other circles that make up its 17 priority circles, it remains the third largest operator.

 

These circles make up 99 per cent of Vi’s revenue and about 92 per cent of industry revenue.

 

However, it stressed the telco has focused capital expenditure towards these priority circles to improve competitiveness with improved 4G coverage and 5G rollout. The company has an overall capex plan of ₹50,000-55,000 crores in the next three years.

 

Last month, the government gave its nod to convert Vi’s outstanding spectrum auction dues into equity shares worth ₹36,950 crores in the telecom operator. While the move comes as a major relief for the financially beleaguered telco, it raises the government’s stake to 48.9 per cent, up from 22.6 per cent currently.

 

Meanwhile, Vi continues to engage lenders for tying up debt funding. In September, 2024, Vi CEO Akshaya Moondra had said debt funding talks will wrap up in the ensuing 4-8 weeks. According to a recent report by Nomura India, Vi would need to secure debt funding of ₹40,000 crore over FY26-27 to manage its dues and capex plans.

 

Regarding average revenue per user (Arpu), a key performance metric for telecom firms, Vi said mobile tariffs need further uptick to generate reasonable returns and support future investments.

 

“Significant headroom in Arpu as usage has increased multi-fold but Arpu has not increased in line with usage. Customer ability to pay higher is already established,” it told investors. 

 

Vi’s blended Arpu rose to ₹173 in Q3 (October-December) FY25, up from ₹166 in the preceding quarter. As compared to this, rival Ariel had an ARPU of ₹245 while Jio’s Arpu rose to ₹203.3.