Vodafone Idea surrenders 5 MHz spectrum in 1800 Mhz band in two circles ahead of auctions

Vodafone Idea

Cash-strapped Vodafone Idea (Vi) has decided not to opt for the extension of spectrum in West Bengal and UP West circles in the 1800 Mhz band until the next auction round on May 20 and has surrendered it to the Department of Telecommunications (DoT) to reduce liabilities, sources said.

Sources said Vi surrendered the 5Mhz spectrum in these two circles. The telco already has ample spectrum in the 1800MHz band in these two renewal circles, so it decided not to seek an extension and surrender the spectrum.

The telco, however, will renew its spectrum in 900 Mhz in these two circles in the auction.

Vi has renewals for a total of 12MHz of spectrum in the 1800MHz and 900MHz bands in two circles. This would have resulted in a spending of Rs 1,500 crore at reserve prices.

In a note, Jefferies said that Vi might renew the 900MHz band, especially in the West Bengal circle, leading to a total expenditure of Rs 200 crore.

"Upon assessing our usage and needs, we have surrendered some spectrum in both West Bengal and UP West. We remain committed to providing seamless services to our customers while also focussing on optimizing for operational efficiency and future growth," Vi spokesperson told Moneycontrol.

Following approval by the cabinet last month, the Department of Telecom gave Bharti Airtel a three-month extension for its expiring spectrum.

Vi has the highest 4G spectrum per million subscribers, which is expected to drive growth, the telco said in its investor presentation uploaded on its website on March 11. It also added that it has sufficient spectrum to support migrating the entire 4G subscriber base to 5G.

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

On January 30, Vi said it would need 6-7 months to roll out 5G services after securing funding, for which discussions with investors are underway. During the company's earnings call, the ailing telco’s CEO, Akshaya Moondra, said Vi was talking with vendors about the 5G rollout and developing use cases.

In its investor presentation, the 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 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.

As reported by Moneycontrol, Vi 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).

The government will support Vodafone Idea’s plan to raise Rs 45,000 crore in equity and debt, including capital from its promoters, Union IT and Communications Minister Ashwini Vaishnaw told Moneycontrol in an interaction. He added that the government has taken all possible measures to support the ailing telco thus far.

Vi reported that its net loss narrowed to Rs 6,986 crore in the December quarter, helped by Rs 755.5 crore one-time exceptional gain, while average revenue per subscriber improved.