Vodafone Idea banks on late 5G entry for cost savings, pushes for tariff hike

Vodafone Idea

Vodafone Idea (Vi) is turning its delayed 5G rollout into an opportunity by adopting advanced and cost-effective technologies and also pushing for higher tariffs to ensure long-term financial sustainability.

In an investor presentation filed with the exchanges on April 9, Vi stated said its late entry into the 5G space allowed it to deploy the latest network innovations, including Disaggregated Radio Access Network (RAN). This approach drives cost efficiency, enables new service capabilities, and offers greater operational flexibility.

Simultaneously, the beleaguered telecom operator stressed the need for tariff correction, saying average revenue per user (ARPU) lagged the exponential growth in data consumption.

“There is significant headroom for ARPU growth. Usage has grown multifold, but ARPU has not increased in line. The ability of customers to pay higher tariffs is already established,” the company told investors.

Vi’s blended ARPU rose to Rs 173 in Q3 FY25 (October–December), up from Rs 166 in the previous quarter. Rival Airtel reported an ARPU of Rs 245, while Jio posted Rs 203.3 during the period.

It is focused on driving ARPU growth by expanding its 4G footprint and upgrading its 2G subscriber base, which it sees as a significant opportunity.

The company aims to increase the proportion of high-ARPU users by delivering a superior experience. It is also looking to develop tailor-made offerings for consumer to grow market share and is working to boost the penetration of broadband-enabled devices in partnership with NBFCs, the company said.

In March, Vi launched its commercial 5G services in Mumbai, entering the market over two years after Bharti Airtel and Reliance Jio. The company has scheduled rollouts in Delhi, Bengaluru, Chandigarh, Patna, and Mysuru by the end of April.

According to the presentation, Vi has sufficient spectrum to support migrating its 4G user base to 5G. The company has outlined a capital expenditure plan of Rs 50,000–55,000 crore over three years.

In a big relief to the debt-laden company, the government in March approved the conversion of Vi’s outstanding spectrum auction dues into equity worth Rs 36,950 crore, raising the Centre's stake in the company to 48.9 percent from from 22.6 percent.

Vi continues to engage with lenders to finalise its debt funding.

The company is among the top ten cellular operators globally by subscriber base in a single country and remains the third-largest operator in India, the world’s second-largest wireless market. The company sees significant growth potential driven by India's rapid digitalisation and increasing smartphone penetration.

Vi also outlined its efforts to expand 4G coverage and deepen its presence in new geographies. The company said it aims to protect and grow its connectivity business on the enterprise side by delivering a superior user experience and leveraging Vodafone Group’s global expertise. It is enhancing its segment-specific go-to-market strategy to grow wallet share in large accounts and boost SMB penetration through digital offerings.

The company is also offering end-to-end services to tap into high-growth areas like IoT. It is investing in adjacent segments such as CPaaS (Communications Platform as a Service), cloud services, and cybersecurity.

The presentation noted that strategic collaborations to unlock digital monetisation opportunities are also on the cards.

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