Vodafone Idea turns the corner, announces India 5G launch plans

There is a new buzz at Vodafone Idea, India’s third-largest service provider, as it gets ready to launch 5G services later this year.

"We have completed the 5G minimum rollout obligation. We have also done testing and we now need to deploy 5G," Vodafone Idea CEO Akshay Moondra said during a press conference.

The company is planning to cover 40% of its revenue base over the next 24-30 months, and will initially be focusing on launching 5G in 17 circles (service areas). It will also invest in boosting its 4G network and capacity.

According to media reports, the service provider will initially invest 57.2 billion Indian rupees ($0.68 billion) out of the INR180 billion ($2.15 billion) it seeks to raise from a Follow-on Public Offer (FPO) in building 5G networks. It also plans to spend INR127.5 billion ($1.52 billion) on setting up new 4G sites and enhancing the capacity of the existing 4G network.

4G focus

It is significant that the company would be investing much more in the 4G network, where it already has a good presence, instead of building 5G networks. This might be because Vodafone Idea needs to urgently increase Average Revenue Per User (ARPU), which is unlikely to happen with 5G, at least not in the short term.

About 42% of Vodafone Idea’s subscribers still use 2G, Moondra mentioned during the press conference, and improved 4G network will help the telco migrate these users to 4G, which will also help in boosting its ARPU. The telco’s ARPU was INR145 ($1.7) in the quarter ending December 2023, much lower than Airtel’s at INR208 ($2.48), or Jio’s at INR181.70 ($2.17).

With 4G expansion on the cards, the telco might be targeting the rural market, where data consumption continues to rise. It will face strong competition from Airtel and Jio, which are also now focusing on the rural segment for new subscribers and also on migrating 2G users to 4G.

Vodafone Idea is also believed to be in talks with all major vendors for 5G gear. It was recently in the news for conducting an Open RAN pilot with Mavenir.

Clearly, the success of fundraising and the announcement of 5G plans are positive steps and ensure Vodafone Idea's presence in the country. However, it will take a lot more for the company to meaningfully compete with Reliance Jio and Bharti Airtel. The other two private telcos launched 5G in 2022, and that gives them a crucial head start. 

Even so, Vodafone Idea’s management and the industry can breathe a sigh of relief today that the telco is going to be part of India's telecom industry for many more years.