Vodafone Idea Limited (VIL), the third-largest telecom operator in the country, recently announced that it had concluded a $3.6 billion USD deal wherein it would source equipment from Nokia, Ericsson and Samsung. The deal will expand the presence of 4G in the country. What does this mean for the company, its users, and the vendors?
Vodafone Idea has been much behind its competitors when it comes to capex levels over the last few years. It is also because Jio and Airtel were launching 5G. However, even in the 4G department alone, Vi couldn't spend as much to upgrade infra and reach more places because it didn't have money. The recent fundraising via equity has enabled the telecom operator to place such a large order.
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From the perspective of the company, it is a bold and correct step in hindsight to prioritise 4G over 5G. 4G is still what several hundred million mobile users in India consume, while 5G is just an added benefit with high-priced plans for Jio and Airtel customers. Vodafone Idea has been losing customers because of inferior coverage experience, but this deal will definitely help with eradicating this issue. It is also important to remember that Vi has been deploying 900 MHz spectrum to improve coverage in the country.
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As for the users, the better mobile network experience with Vi will definitely be a breath of fresh air. Vodafone Idea's goal is to increase its network coverage to a population of 1.2 billion from the current 1.03 billion. This will happen over the next three years. The deal will also be great for the business of vendors. Samsung is also eyeing a larger pie in the telecom equipment market share (in India) and this deal will help the company in taking the first major step towards its goal.
The deal will bolster the mobile networks of Vodafone Idea. 4G is what people will continue to use over the next several years. Thus, a better 4G presence would definitely help Vi in attracting more customers and retaining the existing ones.
