In Short:
Vodafone Idea (Vi) is finalizing a ₹13,200 crores deal with Ericsson and a ₹3,300 crores deal with Samsung for 4G and 5G network equipment. These contracts follow a ₹13,500 crores deal with Nokia. Vi aims to enhance its competitiveness against rivals by boosting its network capabilities. The company plans to raise ₹35,000 crores to fund these expansions.
Kolkata: Vodafone Idea (Vi) is poised to finalize a significant transaction worth approximately Rs 13,200 crore with Sweden’s Ericsson, along with a Rs 3,300-crore agreement with South Korea’s Samsung this week. These deals are aimed at procuring equipment for the company’s forthcoming expansion of its 4G network and the rollout of 5G services.
This development follows shortly after Vi’s prior agreement valued at around Rs 13,500 crore with Finland’s Nokia, marking the second and third major contracts for radio network equipment orchestrated by the telecom joint venture between UK’s Vodafone and India’s Aditya Birla Group.
Details of the Agreements
According to sources privy to the negotiations, Ericsson will deliver 4G and 5G network gear to Vi across 10 telecom circles, while Samsung will be responsible for supplies in three key markets. The competing bids between Ericsson and Samsung over the past few days culminated in the Swedish vendor securing the critical 4G/5G supply contract for Delhi, while the Korean firm obtained the contract for the lucrative Karnataka circle.
Under the new agreement, Ericsson is expected to provide 4G and 5G base stations to Vi in the following regions: Delhi, Rajasthan, Himachal Pradesh, Jammu & Kashmir, Odisha, Maharashtra, Northeast, Assam, Kerala, and Madhya Pradesh. Samsung will focus on supplying network gear in Karnataka, Punjab, and Bihar.
Strategic Implications
At present, Vi, Ericsson, and Samsung have not provided comment to ET regarding the ongoing discussions.
Industry insiders suggest that Nokia may have gained a competitive advantage, as nearly 53% of Vi’s customers reside in the nine circles where the Finnish vendor will provide 4G/5G equipment. In contrast, the 10 circles awarded to Ericsson encompass less than 40% of Vi’s customer base.
A senior industry executive noted, “This indicates that Vi may allocate more on network capital expenditure in markets served by the Finnish vendor, potentially boosting future business opportunities for Nokia.” ET previously reported on September 29 that Nokia will supply 4G/5G base stations to Vi in Mumbai, Gujarat, Andhra Pradesh, Haryana, UP-East, UP-West, West Bengal, Kolkata, and Tamil Nadu/Chennai.
Future Outlook
The three vendor agreements form part of Vi’s recently announced strategy to invest $3.6 billion (approximately Rs 30,000 crore) in 4G and 5G infrastructure over three years, aimed at enhancing its 4G operations and initiating 5G networks in prime cities across 17 priority circles.
Upon the successful closure of these agreements, Vi will take a significant step in enhancing its market competitiveness against financially robust rivals such as Reliance Jio and Bharti Airtel, while also addressing ongoing customer attrition.
Sources familiar with the negotiations have indicated that Vi is close to finalizing the contracts, as all three vendors have largely reached a consensus on the commercial terms, including pricing and payment arrangements.
This development is propelled by Vi’s commitment to provide necessary letters of credit (LCs) within a reasonable timeframe, ensuring that the vendors can fulfill the initial purchase orders. These LCs will serve as guarantees from banks, ensuring timely payments to the vendors for the 4G/5G equipment.
Vi is actively working to expedite all commercial arrangements with its global partners to ensure the prompt delivery of network gear starting in early November.
Recently, Vi’s CEO Akshaya Moondra shared with analysts his expectation to complete the remaining Rs 35,000 crore fundraising plans within two months, comprising Rs 25,000 crore in bank loans and Rs 10,000 crore in revolving LC facilities.
