Vodafone Idea aims 5G rollout post-FPO fund raising

Vodafone Idea, whose mega follow-on public offering (FPO) of ₹18,000 crore will open for subscription on Thursday, April 18, is planning to roll out its 5G services in select areas in the next 6-9 months.

According to Akshaya Moondra, chief executive officer (CEO), Vodafone Idea, the 5G rollout will cover 40% of the company’s overall revenue base in the next 24-30 months, though he declined to share further guidance, as the telecom major is in the midst of the FPO process.

Incidentally, rolling out 5G services is one of the objectives of the fundraising and, according to Moondra, around ₹5,720 crore from the FPO proceeds will be used for the rollout.

This assumes significance as the company’s rivals – Reliance Jio and Bharti Airtel –both have already rolled out 5G services.

The company proposes to utilise net proceeds from fresh issue of equity shares towards funding‑‑(i) purchase of equipment for the expansion of its network infrastructure amounting to ₹12,750 crore, which includes (a) setting up new 4G sites; (b) expanding the capacity of existing 4G sites and new 4G sites and (c) setting up new 5G sites.

Further, the proceeds of the issue would be used for clearing out certain deferred payments for spectrum to the Department of Telecommunications (DoT) and the GST thereon amounting to ₹2,175 crore and balance amount will be used for general corporate purposes.

Meanwhile, according to Moondra, the 4G subscriber base of the company has continued to grow for 10 consecutive quarters even though the overall base has declined primarily due to changes in entry-level plans, SIM consolidation, and lower 4G coverage when compared to the competition.

On the other hand, the company’s average revenue per user (ARPU) has also improved over the last 10 consecutive quarters driven by price increase and customer upgrades, which in turn, has supported revenue growth despite customer churn.

The telecom major has fixed a price band of ₹10-11 per equity share and the FPO will close for subscription on April 22.

Shares of the telecom major gained 1.54% on Monday to close at ₹13.16 on BSE. The share price has more than doubled in the last one year, rising from ₹6 in April last year.

The merchant bankers managing the FPO are Axis Capital, SBI Capital Markets, and Jefferies India.