Vi inks $3.6 billion deal with Nokia, Ericsson, and Samsung for 4G network expansion and 5G rollout
The company has continued with its existing long-term partners, Nokia and Ericsson, and has onboarded Samsung as a new partner. Marking Vi's first-ever tie-up with Samsung, a new deal part of $6.6 bn capex plan.
Vodafone Idea has extended its long-term partnerships with Nokia and Ericsson, bringing Samsung on board for the first time. This is part of a $3.6 billion deal to expand 4G networks and launch 5G in key markets. This marks the first of the company's three-year, $6.6 billion investment plan aimed at expanding 4G coverage from 1.03 billion to 1.2 billion people. The new equipment aims to improve energy efficiency and reduce operational costs. Deliveries will begin in the next quarter.
Following its recent Rs 24,000 crore capital raise and acquisition of spectrum worth Rs 3,500 crore in June 2024, Vodafone Idea has already rapidly implemented profitable capex to increase capacity by 15% and expand population coverage by Rs 1,600 crore.
Vi's management team, including CEO Akshaya Moondra and CFO Murthy GVAS, will meet with investors and analysts on September 23. This came after the Supreme Court dismissed a petition by Vodafone Idea and other telecom operators seeking recalculation of adjusted gross revenue (AGR). Vodafone Idea now owes AGR dues of over ₹ 70,300 crore.
On Friday, Vodafone Idea shares closed up 1.35 percent at ₹ 10.52 despite a 38 percent fall in 2024.
Big win for Nokia and Ericsson
The company has continued to work with existing long-term partners Nokia and Ericsson. It has also secured Samsung as a new partner after testing its vRAN technology in various circles with telecom operators.
In June, the board approved the issue of preference shares worth Rs 1,520 crore to Nokia Solutions and Rs 938 crore to Ericsson India. This amounts to Rs 2,458 crore at an issue price of Rs 14.8 per share.
Since April, Vodafone Idea has signed key agreements with Nokia and Ericsson for hardware and software network upgrades.
European players Nokia and Ericsson, which have reported a steep decline in revenue since the last quarter of the 2023 calendar year due to a drop in 5G spending, will also take solace in the big deal with Vodafone Idea.
Nokia is expected to secure more than 50% of the contract by volume, while Ericsson will have about a 40% share, according to a person familiar with the matter. "Samsung is still in the single digits in this deal because it is a new provider," the person said.
Another person said European providers have also managed to win new business in the telecom industry, where Huawei and ZTE have deployed 4G equipment. "There are six circles where Huawei and ZTE have deployed," he said.
Samsung's recent deal with Vodafone Idea has provided some relief as it looks to expand its presence among operators in the country. Samsung had previously inked a smaller deal with Bharti Airtel. Samsung was Reliance Jio's sole 4G equipment supplier before it opted for Nokia and Ericsson to expand its 5G network in the country.
One of the major steps in this process was the completion of a techno-economic evaluation of the company’s long-term projections by an independent third party, which was recently completed. The report has been submitted to all the banks and financial institutions. Basis this report the banks will now progress with their internal evaluation and approval processes,” the telco said in a statement.
Vodafone Idea's net debt was $28 billion until the first quarter of 2024-25, including an AGR liability of $8.5 billion. Twenty percent of this debt is principal, and the rest is interest and penalties.
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