Vodafone Idea inks $3.6B network equipment deal with Nokia, Samsung
What's the story
Vodafone Idea (Vi) has secured a $3.6 billion deal with tech giants Nokia, Ericsson, and Samsung.
The agreement involves the supply of network equipment over a three-year period.
This marks the initial phase of Vi's three-year capital expenditure plan worth $6.6 billion.
The firm aims to expand its 4G coverage from 1.03 billion to 1.2 billion people through this initiative, while also launching 5G services in key markets and increasing capacity to meet data growth demands.
Strategic alliances
Vi continues partnership with Nokia, Ericsson
Vi has decided to continue its long-standing partnerships with Nokia and Ericsson, while also bringing Samsung on board as a new partner.
In June, the company's board approved the issuance of preferential shares worth ₹1,520 crore to Nokia Solutions and ₹938 crore to Ericsson India.
This totals up to ₹2,458 crore with shares issued at ₹14.8 each.
Orders for network upgrades have already been placed by Vi in critical circles.
Customer benefits
Deal to enhance customer experience and lower operating costs
The contracts with Nokia, Samsung, and Ericsson will enable Vi to quickly capitalize on the latest cutting-edge equipment, thereby enhancing customer experience.
The company also expects efficiency gains in energy from the new equipment, leading to reduced operating costs.
Deliveries for these long-term awards are set to begin in the upcoming quarter with a primary focus on expanding 4G coverage to 1.2 billion Indians.
Financial outlook
Vi's financial obligations and future plans
As of March 2024, Vi owed the government ₹2,03,430 crore.
This sum includes deferred spectrum payment obligations of ₹1,33,110 crore and AGR (adjusted gross revenue) liability of ₹70,320 crore.
The company hoped for court relief on the latter but was disappointed when the Supreme Court rejected pleas by telecom companies for re-computation of AGR.
Now, Vi is actively discussing with lenders to secure ₹250 billion in funded facilities and ₹100 billion in non-funded facilities for its long-term capital expenditure plan.