Vodafone Idea plans to get back in the game with four-fold jump in CAPEX to $2 billion

Over the past three years, cash-strapped Vi has lost millions of customers and revenue share every quarter to Jio and Airtel. This is mainly due to its inability to invest adequately in expanding its 4G network to match its rivals on mobile broadband coverage. However, things may be looking up for the telco after November's broad-based prepaid tariff hikes and the reforms package, which analysts say will offer it a Rs 1 lakh crore cash flow relief over four years.

Vi's management also expects it to clear dues relating to the redemption of non-convertible debentures (NCDs) on time. The telco has cleared a ₹1,500-crore tranche that was due in December and needs to pay another ₹4,500 crores towards NCD redemptions through January-February 2022, according to disclosures in its latest annual report. Vi has indicated it may look to increase its tower footprint to 200,000 sites, from 180,000 as of now.

The telco, though, believes "meaningful 5G investment is still some time away, as there is still no strong use case." Vi expects a further tariff hike as the industry is still operating at a very low ROCE (return on capital employed). Airtel, Vi, and Jio recently hiked tariffs for prepaid users by 20-25%.

VI is targeting a four-fold jump in annual capital expenditure to $2 billion (about ₹15,000 crores), the telco's top management has said, as it looks to take on stronger rivals. At an internal investors' call this week, it also said equity funding including from promoters is set to be tied up by March. This is the first time the senior management has clearly said Vi's promoters UK’s Vodafone Plc and the Aditya Birla Group (ABG) are likely to infuse equity, amid efforts to close the telco's long-pending fundraise. The loss-making telco, with a cash balance of ₹250 crores at September end, has been in talks with a slew of private equity players such as Apollo Global for equity and debt funding, as it looks to turn around operations. ET previously reported that ABG chairman Kumar Mangalam Birla was considering a capital infusion into Vi, following the telecom relief package announced by the government. Before the relief announcement in September, ABG and Vodafone had refused to put in any fresh equity.

Source: The Economic Times