Government of India-Backed Telecom Stock Under Rs 20; Company Concludes Mega USD 3.6 Billion Deal With Nokia, Ericsson and Samsung
The deal marks the first step towards the rollout of the company’s transformative three-year capex plan of USD 6.6 billion (Rs 550 billion).
Vodafone Idea Ltd (VIL) has concluded a mega USD 3.6 billion (Rs 300 billion) deal with Nokia, Ericsson and Samsung, for the supply of network equipment over three years. The deal marks the first step towards the rollout of the company’s transformative three-year capex plan of USD 6.6 billion (Rs 550 billion). The capex programme is directed towards expanding the 4G population coverage from 1.03 billion to 1.2 billion, launching 5G in key markets and capacity expansion in line with data growth. The company has continued with its existing long-term partners Nokia and Ericsson and also onboarded Samsung as a new partner.
These contracts will allow the company to quickly capitalize on the latest state-of-the-art equipment to offer enhanced customer experience. Further, the learnings and insights obtained by the vendors in the Indian market over the last two years will enable the company to embark on a more flexible and modular rollout plan by customising the services for all advanced technologies (4G & 5G). In addition, the new equipment will also lead to efficiency gains in energy and thus lower operating costs. The supplies against these new long-term awards will start in the coming quarter. The top priority for the Company is to expand the 4G coverage to 1.2 billion Indians.
Post the recent equity raise of Rs 240 billion and additional spectrum acquisition of Rs 35 billion in the June 2024 auction, the Company has also executed some quick win capex, while simultaneously working on concluding these long-term contracts. These quick wins were mainly by way of deployment of more spectrum on existing sites and also the roll-out of some new sites. This will result in a 15 per cent boost in capacity and an increase in population coverage by 16 million by the end of September 2024. We are already witnessing an improvement in customer experience in select geographies where these rollouts have been completed.
The Capex is currently being funded out of the equity raise. For the long-term Capex, the Company is in the advanced stage of discussions with its existing and new lenders to tie up Rs. 250 billion of funded and Rs. 100 billion of non-fund-based facilities. One of the major steps in this process was the completion of a techno-economic evaluation of the company’s long-term projections by an independent third party, which was recently completed. The report has been submitted to all the banks and financial institutions. Basis this report the banks will now progress with their internal evaluation and approval processes.
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About Vodafone Idea Ltd
Vodafone Idea Limited is an Aditya Birla Group and Vodafone Group partnership. It is amongst India’s leading telecom service providers. The company provides pan India Voice and Data services across 2G, 3G and 4G platforms. The company holds a large spectrum portfolio including mid-band 5G spectrum in 17 circles and mm-Wave 5G spectrum in 16 circles. To support the growing demand for data and voice, the Company is committed to delivering delightful customer experiences and contributing towards creating a truly ‘Digital India’ by enabling millions of citizens to connect and build a better tomorrow. The Company is developing infrastructure to introduce newer and smarter technologies, making both retail and enterprise customers future-ready with innovative offerings, conveniently accessible through an ecosystem of digital channels as well as extensive on-ground presence. The Company’s equity shares are listed on the National Stock Exchange (NSE) and the BSE in India.
The company has a market capitalization of over Rs 73,000 crore and as of September 23, 2024, the shares of the company are trading below Rs 15 each. The company's majority of stake i.e., 23.15 per cent, is owned by the Government of India (Department of Investment and Public Asset Management).
Disclaimer: The article is for informational purposes only and not investment advice.