Vodafone Idea’s (Vi) future has changed in the course of one month. The telco, which was feared to go bankrupt in the coming years, is now confident about its 5G plans. All of this has been possible because of the relief package that the government announced for the sector. But there’s one more thing you can’t deny; Vi was largely in debt to the government. The telco’s networks aren’t necessarily poor, yet, it was in the position of going out of business? Is Vodafone Idea alone to be blamed here? Some would agree, but I believe it was also a lot to do with the government reforms and policies around spectrum usage charges (SUC), adjusted gross revenue (AGR) dues, amongst other things.
The relief package now allows a moratorium on the payments of dues for the next four years. The government has further redefined AGR and will now not include non-telecom revenues in it. This is a great thing for Vi. So what’s next for the telco?
Vodafone Idea (Vi) Promoters Might Infuse Capital
Ashwini Vaishaw recently confirmed to ET Telecom that Vodafone Idea promoters are ready to invest more capital into the company. This means that the telco’s short-term cash flow worries are going to be resolved. Since there is no huge debt payment ahead, if the telco is able to secure additional funds soon, it can work on its network coverage issues.
Opensignal recently released its monthly insights report for September 2021, and in the report, it is clearly visible just how far behind Vodafone Idea is from Airtel and Jio when it comes to providing network coverage.
But that can be rectified very fast as the telco can aggressively invest in its networks. As per a PTI report, Himanshu Kapania, Non-Executive Chairman, Vodafone Idea, recently said that the telco is confident about investing in new technologies, which include 5G. This is because of the relief package that has come in as a saviour of the company.
This has largely helped the stock of the company as well. With tariff hikes in the near future, who knows, Vodafone Idea might just be able to get traction from outside investors as well! Don’t forget that the telco had already received approval for raising Rs 25,000 crores from outside investors.
One of the biggest things that 5G will bring for the telecom operators, including Vodafone Idea, is enterprise revenues. 5G use cases largely point in the direction of more and more enterprises adopting it aggressively rather than mobile users who can do almost everything with a good 4G network.