Indian company Vodafone Idea on Sunday signed a contract worth $3.6 billion with mobile phone and network makers Nokia, Ericsson and Samsung to supply equipment over a three-year period, the company said in a statement to the stock exchange.
“The deal marks the first step towards implementing the company’s $6.6 billion (Rs 550 crore) three-year transformational investment plan,” the company said.
“The investment program aims to increase 4G coverage from 1.03 billion to 1.2 billion people, roll out 5G in key markets and expand capacity in line with data growth.
Vodafone Idea, formed in 2018 from a merger between the Indian arm of Britain’s Vodafone Group and Aditya Birla Group’s Idea Cellular, has posted a loss in every quarter as it lost market share to larger rivals Bharti Airtel and Reliance Jio.
In early 2024, the company sold shares to institutional investors, raised funds through the country’s largest follow-on public offering, and is currently in talks with lenders as part of its plans to raise around $5 billion to roll out its 5G network, expand 4G coverage, and regain market share.
Deliveries under the new contract will start in the coming quarter, Vodafone Idea said, adding that expanding 4G coverage remains a top priority.
“The capital expenditure is currently being funded from the capital raise. For the long-term capital expenditure, the company is in advanced stages of discussions with its existing and new lenders to obtain Rs 250 billion of funded and Rs 100 billion of unfunded loans,” said Chief Executive Officer Akshaya Moondra.
On Thursday, India’s Supreme Court rejected a request by telecom companies, including Vodafone Idea, to recalculate their debts to the government, sending shares plummeting. Vodafone Idea shares have fallen over 40% so far this quarter.
ICRA analysts estimate that Vodafone Idea and Bharti Airtel owe 1 trillion rupees ($12 billion) in past dues, including spectrum fees and licensing fees. No estimates were given for the other companies.
