Vodafone Idea 5G delay imminent as financial issues continue

Vodafone Idea 5G financial
Woman holding a mobile phone against urban background with vodafone Idea VI logo indias telecom operator which has been struggling

Vodafone Idea, India’s third largest telco, will most likely delay its 5G launch as its equipment vendor partners, such as Nokia and Ericsson, seek advance payments for 5G radio. The telco’s tower infrastructure partners Indus Towers and American Tower Co (ATC), have been asking the telco to clear current dues before they enter new agreements for the 5G network.

Vodafone Idea owes around Rs 3000 crore (US$36,920,700) to Nokia, up to Rs 1000 crore (US$2,306,900) to Ericsson in 4G-network-related dues, around Rs 7000 crore (US$86,148,300) to tower company Indus Towers and Rs 2000 crore to American Tower Co. (ATC).

The telecom JV between UK’s Vodafone Group Plc. and India’s Aditya Birla Group (ABG) is unable to raise fresh funding, resulting in deteriorating network quality leading to subscriber losses. According to a report by the Economic Times, with no clarity on its 5G plans, the struggling telco may lose more subscribers at a time when bigger rivals Bharti Airtel and Reliance Jio are set to launch their commercial services.

Experts believe that Vodafone Idea may lose the premium/postpaid subscribers who may move to competitors to experience 5G.

According to data released by the sector regulator, TRAI, the struggling telco lost another 1.54 million mobile customers in July, shrinking its user base further to 255.1 million.

“Equipment vendors have been asking the telco to clear their 4G dues and have asked for 5G advanced payments (APO) for 5G radio procurement,” a source was quoted as saying by the publication.

Another source told the publication that tower companies are being cautious because of the current dues and want clarity before they consider new tenancies on their towers for the telco’s 5G services.

Vodafone Idea isn’t aggressive in driving 5G deal-related talks

The report added that Vodafone Idea isn’t aggressive in driving 5G deal-related talks with vendors due to the current financial situation and no clarity on any funding arrangement.

Jio and Airtel will launch initial commercial 5G services by the Diwali festival in October across various cities. Both telcos have already shared plans to expand the high-speed broadband service across India in 18-24 months.

Notably, Vodafone Idea hasn’t announced any such plans to date.

Previously, the telco’s chief executive officer Akshaya Moondra told shareholders that 5G launch plans would be finalised only after it lines up new bank loans and seals network equipment procurement contracts. It also said that the company’s 5G launch would depend on use cases.

Vodafone Idea, which has for a long time been trying to raise Rs 20,000 crore (US$246,138,000), bought 6,228 MHz of airwaves in its 16-17 priority circles in the recent spectrum auctions.

Reliance Jio purchased the highest quantum spectrum of 24,740 MHz, while Airtel picked up 19,867 MHz of spectrum.

Related article: Vodafone Idea investors unwilling to invest, seeks moratorium to clear dues

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