Vodafone Idea plans Rs 27,000 crore Capex for 4G coverage

Vodafone Idea CEO Balesh Sharma said the telecom operator aims to invest Rs 27,000 crore in 2019-2020 to expand its 4G footprint to cover 80 percent or 1 billion of India’s population by 2020.
Vodafone Idea market share India“We are committed to expanding our 4G broadband to cover over a billion people by 2020. At present, the company’s two brands together provide 4G coverage to about 50 percent of total 1.3 billion population,” Balesh Sharma said.

Vodafone Idea, the largest Indian telecom operator with about 422 million users, aims to cover about 1.04 billion population in the next two years.

Poor performance

Vodafone Idea lost 13 million phone customers in the second quarter of fiscal 2018-19.

Vodafone Idea’s mobile ARPU dropped 4.7 percent quarter on quarter to Rs 88 for the quarter.

Vodafone Idea added 4.4 million broadband customers taking the total number to 99.7 million. Data volumes expanded to 2,260 Petabytes during the quarter as the usage per data customer increased to 5.6 GB per month vs 5.0 GB in Q1FY19.

Vodafone Idea added 24,866 3G and 4G sites during the second quarter, taking the overall broadband site count to 365,575. 4G sites are VoLTE enabled. Vodafone Idea deployed TDD spectrum (2300 / 2500 MHz) in 16 out of 20 services areas.

Vodafone Idea’s broadband coverage is available in 261,000 towns and villages, covering ~ 817 million Indians or 67.6 percent of the population. The Capex spend for the quarter was Rs 33 billion and the focus was on 4G expansion.

Merger brings savings

The largest telecom operator company is expecting savings worth Rs 14,000 crore due to the merger by fiscal 2021 rather than fiscal 2023 as earlier estimated.

The company expects advancing of synergy target by two years will help it improve cash flow to the tune of Rs 8,400 crore and re-deployment of co-located equipment of Vodafone and Idea Cellular will help it save Rs 6,200 crore.

The company has chalked out deleveraging plan by raising capital and sell 11.15 percent stake in Indus Towers.

Vodafone Idea estimates that sale of 11.15 percent stake in Indus Towers can realise Rs 5,000 crore. The cash-strapped company will sell the stake with the purpose of lowering the debt.

The merged telecom operator’s gross debt as on September 30, 2018 stood at Rs 1,26,100 crore. Around 79 percent debt on the company is net dues for spectrum payment.

The number of telecom towers after the merger decreased to 2 lakh from 2.7 lakh earlier, and is expected to reduce to about 1.80 lakh.

“Smart network planning and coverage will ensure better network expansion to customers, despite reduction in number of towers,” Sharma added.

The company will pay about Rs 3,000 crore towards spectrum levies by March 2019, and Rs 12,000 crore more by fiscal 2020, Akshaya Moondra, chief financial officer at Vodafone Idea said.

Vodafone-Idea Chairman Kumar Mangalam Birla on Thursday met Telecom Secretary Aruna Sundararajan to discuss the challenges in the Indian telecom industry. Birla discussed about annual spectrum payment, which is due in March. He requested the government to consider allowing the payment in instalments.