Vodafone Idea (Vi) has not yet made any comments on when it is going to launch 5G in India. This delay could cause the company to lose out on high-paying customers. That would be detrimental to the average revenue per user (ARPU) of the telco. Vi's competitors are rolling out 5G at full flow and plan to offer complete 5G coverage in approximately 1.5 to 2 years. Vodafone Idea's funding woes have stalled the telco from making moves around 5G. The telco has already done testing of its 5G networks in Delhi and has also demonstrated use cases on its 5G networks at the India Mobile Congress (IMC) 2022.
According to ICICI Direct, VIL (Vodafone Idea Limited) remains the weakest private telecom company. The telco has a series of debt repayment duties in the near future, and for that, it desperately needs capital. Even though the government has gone ahead with the dues to equity conversion, it only helps the telco in staying afloat and doesn't guarantee any growth in the short or medium term. For VIL, the quarterly loss widened to Rs 7900 crore, which is approximately $1 billion USD.
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ICICI Direct said, "The delay in 5G launch could further lead to elevated churn in high ARPU and postpaid customer. We highlight that recent government relief measures (including interest on AGR dues moratorium conversion) would ensure survival of VIL but future growth outlook remains gloomy."
The high-paying customers who want to get the best speeds with 5G won't have any other option but to switch to either Airtel or Reliance Jio. Vi's postpaid subscriber base has been the largest for a long time, but that's not likely going to be the case if the telco doesn't launch 5G soon and improve the performance of 4G networks.
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Will Vi be Able to Launch 5G Soon?
Vodafone Idea needs funds to go ahead and do anything it wants to, including rolling out 5G. The telco's CEO said that Vi is already in talks with the banks to raise more funds via debt and is also talking with other parties to raise funds via equity. The Aditya Birla Group has promised the government that it would bring in fresh investments for the struggling telco. This was the promise that triggered the government to convert dues into equity.
That said, Vi is unlikely to launch 5G soon. This is because as soon as the telco raises funds, its first priority would be to service existing debt and dues to vendors, lenders, and tower companies.
