New Delhi: Vodafone Idea is facing trouble finalising deals for 5G equipment supplies and tower tenancies with vendors asking the cash-strapped telco to clear their 4G-related dues and fork out advance payments for fresh contracts, people familiar with the matter said.
Vodafone Idea owes around Rs 3,000 crore to Finnish equipment supplier Nokia and up to Rs 1,000 crore to Sweden’s Ericsson in 4G-network-related dues. The telecom JV between UK’s Vodafone Group Plc. and India’s Aditya Birla Group (ABG) also owes around Rs 7,000 crore to tower company Indus Towers and Rs 2,000 crore to American Tower Co. (ATC).
Queries sent to Vi, ATC, Nokia didn’t elicit any response. Ericsson and Indus Towers declined to comment.
Vi yet to announce 5G launch plan
Bharti Airtel and Reliance Jio have already firmed up their plans to launch initial commercial 5G services by Diwali and spoken of expanding services across India in 18-24 months. Vi hasn’t announced any such plans.
“Equipment vendors have been asking the telco to clear their 4G dues and have also asked for advanced payments for 5G radio procurement,” one of the people told ET.
Similarly, tower companies are also being cautious because of the existing dues. “They want clarity (on clearing previous dues) before they consider new tenancies on their towers for the telco’s 5G services,” another person said.
“Vi too isn’t pushing too much to close the deals since it has been unable to close any funding arrangements till now,” another executive from a leading telecom vendor said.
Recently, Vodafone Idea’s new chief executive officer Akshaya Moondra told shareholders that the telco’s 5G launch plans will be finalised only after it lines up fresh bank loans and seals network gear procurement contracts.
The telco has for long been trying to raise Rs 20,000 crore, split between more debt from lenders and equity, but hasn’t been able to conclude any deals so far. Its trade payables jumped almost 13.6% sequentially to Rs 14,956.2 crore in the June quarter of FY23. At June end, Vi’s net debt was over Rs 1.98 lakh crore, with its deferred spectrum payment dues at over Rs 1.16 lakh crore and debt from banks and financial institutions at Rs 15,200 crore. Its cash & cash equivalents were at Rs 860 crore.
“Unlike Jio and Airtel, Vi has been slow in terms of rolling out 5G contracts to vendors. Also, the vendors themselves have been apprehensive due to Vi’s financial troubles,” Ashwinder Sethi, Principal at Analysys Mason, told ET.
He added that slow 5G rollouts by Vi may lead to further churn of its customer base, especially the premium post-paid subscribers who may move to competitors to experience 5G.
The telco’s user base shrank by another 1.54 millon in July to 255.1 million, according to the sector regulator, reflecting the carrier’s continuing struggles to compete on the ground.
In the recent spectrum auctions, Vodafone Idea bought 6,228 MHz of airwaves across 1800 MHz, 2100 MHz, 2500 MHz, 3300 MHz and 26 GHz bands in its 16-17 priority circles for Rs 18,799 crore.
Reliance Jio purchased the highest quantum of spectrum of 24,740 MHz across the 700 MHz, 800 MHz, 1800 MHz, 3300 MHz and 26 GHz bands, shelling out Rs 88,078 crore. Second ranked Airtel picked up 19,867 MHz of spectrum across 900 MHz, 1800 MHz, 2100 MHz, 3300 MHz and 26 GHz bands with a total sum of Rs 43,084 crore.