Are Vodafone Idea’s 5G rollout plans facing a hurdle?

Billionaire Mukesh Ambani-led Reliance Jio and billionaire Sunil Bharti Mittal-led Bharti Airtel are moving swiftly to roll out their 5G networks. But debt-laden Vodafone Idea, a joint venture of the UK's Vodafone Group Plc. and India's Aditya Birla Group, is reportedly struggling to do so.

According to a report by The Economic Times, Vodafone Idea is facing trouble finalising deals for 5G equipment supplies and tower tenancies with vendors asking the cash-strapped telecom operator to clear their 4G-related dues and fork out advance payments for fresh contracts. 

How much money does Vodafone Idea owe and to whom?

Citing unnamed sources, ET said that 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 operator also owes around Rs 7,000 crore to tower company Indus Towers and Rs 2,000 crore to American Tower Co. (ATC).

Will a delay in launching 5G services hurt the company?

Yes. The loss-making operator's problems are delaying its 5G launch plans, leaving it vulnerable to further subscriber losses to stronger rivals Reliance Jio and Bharti Airtel.

The company is yet to announce its launch plan for 5G services while Airtel and Jio have already done so. 

Both rivals will launch initial commercial 5G services by Diwali and have spoken of expanding services across India in 18-24 months.

Similarly, tower companies are also being cautious because of the existing dues, the ET report said.

Has the company said anything on record about its 5G launch plans?

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.

Has Vodafone Idea been trying to raise any new financing?

Yes. The telco has 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 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 and cash equivalents were at Rs 860 crore.

Has it also been losing market share?

Also, yes. The telco's user base shrank by another 1.54 million in July to 255.1 million, according to the sector regulator.