Price hike needed to fund efficient 5G rollout, says Vi

The carrier stated in its investor presentation for March 2024 that Vodafone Idea’s delayed adoption of 5G will help it deliver the technology cost-effectively with expanded availability of the newest technology items.

The telco stated in the presentation that cellphone tariffs need to increase in line with inflation. The statement stated that “prices need further uptick to generate reasonable returns and support future investments,” noting that India’s tariffs are lower than those of other major nations worldwide and that the previous tariff hike occurred in November 2021.

The telco claimed that although consumption has increased dramatically, ARPU has not kept up with the growth in usage, and there is a large headroom in ARPU. It further said that the customer’s preexisting ability to pay more has been demonstrated.

In order to increase its competitiveness in the priority market, the cash-strapped telco stated that it is concentrating its investments in 17 circles. Within the first 24 to 30 months of its 5G debut, it hopes to cover 40% of revenue.

The telco said that Vi has competitive and sufficient spectrum to support expansion and that it has enough spectrum to enable the migration of all 4G subscribers to 5G.

Vi said that, working with four vendor partners, it completed its 5G minimum roll-out requirements in four circles: Delhi, Chennai, Pune, and Punjab. According to the presentation, it also tested ViFiber home broadband solutions with several partners and installed new roadmap architectures for vRAN and ORAN.

After obtaining the required finance, Vodafone Idea stated on its January 30 results call that it would roll out 5G services in six to seven months. Having obtained equity commitments from anchor investors totaling more than $1 billion (₹8200 crore), it is seeking to acquire ₹45,000 crore in debt and equity, according to a recent Moneycontrol story.

With increased 4G coverage and the rollout of 5G, the telecom company has developed a plan for targeted capital expenditures to boost competitiveness in key areas. Rearming spectrum in the 900 MHz and 2100 MHz bands is reportedly being done for 4G in order to improve consumer experience.

In order to enhance the 4G user experience, the telecom company is also placing tiny cells in hotspot areas throughout major cities and metropolitan areas.

According to Vi, in order to increase average revenue per user (ARP), a critical performance measure, it will concentrate on growing the 4G footprint in growth markets that are semi-urban and rural.

The telecom provider wants to increase the share of high ARPU users by providing better network experiences in the current markets. As the presentation made clear, Vi is working with partners to develop ideas that aim to increase share.

Vi is also concentrating on increasing the proportion of broadband devices by working with OEMs and NBFCs on targeted programmes.

The telecom company informed its investors that there is a good chance for 2G users to upgrade. More than 42% of its users, it claimed, could switch to 4G.

The telecom stated that there is potential for significant development in the content, gaming, and Internet of Things (IoT) sectors and that it is presently forming partnerships in these areas.

According to Vi, there is potential for significant expansion in a number of areas, including fintech, healthcare, education, and logistics, among others, due to novel use cases. It said that there is a chance for monetization with digital offerings. IIFL Securities