Investment

India’s Vodafone Idea unveils ambitious investment plans

Following the news that India’s Department of Telecommunications (DoT) has frozen the AGR dues of operator Vodafone Idea and allowed staggered repayments spread over 16 years until 2041, the company is now looking ahead with some ambitious investment plans.

According to the Economic Times news service, quoting Chief Executive Abhijit Kishore, Vodafone Idea will invest INR450billion (about US$4.9 billion) in capital expenditure over the next three years to accelerate network upgrades, achieve 5G parity in key markets and drive a turnaround in performance.

The proposed investment will, among other aims, seek full 4G parity with rivals Reliance Jio and Bharti Airtel within 12-24 months, followed by aggressive 5G rollout covering all urban areas within 12-30 months. The strategy also includes converting its remaining 2G sites to 4G in selected markets and exploring fixed wireless access (FWA) for home broadband.

The company says it has already invested INR180 billion (about US$1.96 billion) over the last six quarters.

Growth – double-digit revenue growth and three times Ebitda in the next three years – is the aim, driven by improved subscriber retention, better ARPU and operational efficiencies.

Funding will come from bank debt and non-funded facilities, but Vodafone Plc and Aditya Birla Group, whose merger formed the company and which both still have a significant stake in Vodafone Idea, have planned no immediate equity infusion. Vodafone idea is still suffering subscriber losses and net financial losses, but these are apparently falling, while ARPU is going up, driven by higher data consumption.

Some would argue that the recent resolution of the adjusted gross revenue (AGR) dues has marked a decisive turning point for the company. The company still owes a lot of money, however – more than US$9 billion – in AGR dues, not to mention other debts. However, most of the AGR sum has been frozen for ten years and, with the government promise that total liabilities will be reassessed, there may be a lot more investor confidence than before.

Still, recovery, or even manageable debt, would be an impressive turnaround for a company that has struggled with its finances for a long time.



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