Tariffs need further uptick, late adoption to help deploy 5G cost-efficiently: Vodafone Idea 

The telco has devised a plan for a focused capex to improve competitiveness in priority circles with improved 4G coverage and the introduction of 5G.

Vodafone Idea’s late adoption of 5G will help it deploy the technology cost-efficiently with broader availability of the latest technology products, the telco said in its investor presentation for March 2024.

In the presentation, the telco said mobile tariffs must catch up with inflation. “Prices need further uptick to generate reasonable returns and support future investments,” it said, adding that the last tariff hike was in November 2021, and tariffs in India are lower than in major countries worldwide.

The telco said there is significant headroom in ARPU as usage has increased significantly, but ARPU has not increased in line with usage. It added that the customer's ability to pay higher is already established.

The cash-strapped telco said it has an investment focus in 17 circles to improve market competitiveness in the priority market. It aims to cover 40 percent of revenue in the first 24 to 30 months of its 5G launch.

Vi has adequate and competitive spectrum to fuel growth, the telco said, adding that it has sufficient spectrum to support the migration of the entire 4G subscriber base to 5G.

Vi revealed that it fulfilled its 5G minimum roll-out obligations in four circles: Delhi, Chennai, Pune, and Punjab, with four vendor partners. As per the presentation, it also deployed new roadmap architectures for vRAN and ORAN and tested ViFiber home broadband solutions with multiple partners.

During its earnings call on January 30, Vodafone Idea outlined plans to roll out 5G services within six to seven months after procuring necessary funding. It is looking to raise Rs 45,000 crore in equity and debt, having secured equity commitments from anchor investors exceeding $1 billion (Rs 8200 crore), Moneycontrol reported recently.

The telco has devised a plan for a focused capex to improve competitiveness in priority circles with improved 4G coverage and the introduction of 5G. It is said to be refarming spectrum in 900 MHz and 2100 MHz bands for 4G for better customer experience.

The telco is also deploying small cells in hotspot locations in metro and large cities to improve the user experience when using 4G.

Vi said it will focus on expanding the 4G footprint in rural and semi-urban growth markets to drive average revenue per user (ARP), a key performance indicator.

The telecom operator aims to enhance the proportion of high ARPU subscribers through superior network experience in existing markets. As revealed in the presentation, Vi is also building propositions with partners to target share growth.

Vi is also focusing on driving a higher share of broadband devices through focused programs with Original equipment makers (OEMs) and NBFCs.

The telco told its investors that 2G subscribers present a strong opportunity to upgrade. It said that over 42 percent of its subscribers could migrate to 4G.

The telco is currently working on partnerships in the Internet of Things (IoT), content, and gaming space and said that these areas offer the possibility of substantial growth.

Vi said that new use cases in logistics, healthcare, education, and fintech, among other industries, also offer the possibility of substantial growth. It said that digital offerings offer a monetisation opportunity.