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On 22nd September, Vodafone Idea Ltd (VIL) stated that it had signed an agreement with Nokia, Ericsson, and Samsung for the provision of network equipment for the next three years, valued at roughly $3.6 billion (roughly Rs. 30,000 crore). VIL has added Samsung as a new partner while maintaining its long-standing alliances with Ericsson and Nokia.
Impact of the agreement
Following the agreement, at the close of business yesterday, Vodafone Idea Limited's shares increased by around 11.7 percent to Rs. 11.71 per share, an intraday high. Since then, the price has dropped and is currently selling at Rs. 11.39 per share.
With an estimated cost of $6.6 billion (Rs. 550 billion), this arrangement represents the first phase of the company's revolutionary three-year capital expenditure plan. In response to rising data demand, the capital expenditure plan seeks to increase capacity, launch 5G in strategic markets, and increase the coverage of 4G from 1.03 billion to 1.2 billion people.
The next quarter will see the start of deliveries under these agreements, with the main goal being to increase 4G coverage to 1.2 billion Indians. The suppliers' two years of experience in the Indian market will allow them to develop services for both 4G and 5G technologies, allowing for a more flexible rollout plan.
Speaking about the development, Vodafone Idea Limited CEO Akshaya Moondra stated, "We are on our journey of VIL 2.0, and from hereon, VIL will stage a smart turnaround to effectively participate in the industry growth opportunities."
"We have collaborated with Nokia and Ericsson since our founding, and this represents a new development in that ongoing relationship. We're excited to get started on our new collaboration with Samsung. As we transition into the 5G era, we are excited to collaborate closely with all of our partners," he added.
These agreements are estimated to enable Vodafone Idea to quickly implement the newest cutting-edge technology, greatly improving the user experience for customers. It is also believed that the new technology will reduce operating costs and increase energy efficiency.
Vodafone Idea revealed net sales of INR 10,508 crore for Q1 FY25 in its most recent financial report, down 1.4% from INR 10,656 crore in the corresponding quarter of last year.
Net losses for the company for the quarter were INR 6,432 crore, compared to INR 7,840 crore in Q1 FY24. Nonetheless, the total financial performance is still poor, which is indicative of ongoing difficulties.
Recently, In the midst of an ongoing disagreement over the payment of debts owed to the government, the Supreme Court last week denied telecom companies' request to recalculate their adjusted gross revenues, or AGRs, adding on as more trouble for Vi as it continuosly faces financial crunch.
A corrective plea was filed by Vodafone India, Bharti Airtel, and other firms against the October 2019 ruling of the court, which ordered them to pay the government INR 92,000 crore within three months.
The DoT has computed AGR dues that are in excess of INR 1 lakh crore. Of these, Vodafone Idea is estimated to owe INR 58,254 crore.