The FPO proceeds of Rs 180 crore will be used for infrastructure upgradation and clearing arrears. The government’s stake will be diluted to 24% from the current 32%.
 "Vodafone Idea allocates Rs 572 billion for rollout of 5G wireless network")
Dev Chatterjee Mumbai
Vodafone Idea (Vi) plans to spend Rs 5,720 crore to launch its 5G wireless network within the next 24 months, CEO Akshaya Moondra said on Monday. The cash-strapped telecom company plans to use the money raised in its Rs 18,000-crore further public offering (FPO), the country’s largest so far, to strengthen its telecom infrastructure and clear arrears with the government.
Moondra said the company plans to spend Rs 12,750 crore on purchasing equipment required for expanding its network infrastructure. This includes setting up 4G sites, expanding or adding capacity to existing 4G sites, setting up 5G sites, etc. The company wants to take 5G access to 40 percent of its revenue base over the next two years, Moondra said.
Click here to connect with us on WhatsApp
Ahead of the nationwide launch of 5G services in October 2022, market leader Reliance Jio had announced a cumulative investment of Rs 2 trillion to provide 5G services across the country. The Mukesh Ambani-backed company boasts of 90 million 5G subscribers, which currently account for nearly a quarter of Jio’s mobility data traffic.
Meanwhile, Sunil Bharti Mittal-backed Airtel has outlined 5G additional capex plans worth Rs 2.85 trillion in FY24 and had 75 million 5G users by March this year.
Settlement of membership fees
Vi plans to use the proceeds from the fresh share issue to pay spectrum arrears to the telecom department and taxes amounting to Rs 2,175 crore and the rest for general corporate purposes.
The company said its current 5G spectrum is enough to meet demand and operators don’t need additional spectrum. “We’ve been in negotiations with vendors for 5G for quite some time,” Moondra said, adding that the company will fast-track orders once funding is secured.
“A lot of preparatory work has been done and 5G trials have also been carried out,” he added.
The executive also said investor confidence had returned to the company after the government acquired a 32 percent stake in February last year, making it its largest shareholder.
Post-FPO, the government’s shareholding is likely to come down to around 24%.
Promoter Aditya Birla Group had earlier announced plans to invest Rs 2,000 crore in the company as a preferential allotment of shares, separate from the FPO. UK-based Vodafone has not invested any additional funds in the Indian company.
Vi will also look to raise Rs 25,000 crore of debt from lenders after the FPO.
Moondra said the current average revenue per user (ARPU) is the lowest in the world and operators can improve it by upgrading 2G customers to 4G, but he did not give a timeline for rate changes.
He also did not say whether the government would extend the moratorium period for payment of AGR dues, which have to commence within 18 months.
