Billionaire Birla’s Vodafone Idea To Spend $3.6 Billion On Networks
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October 14, 2024Vodafone Idea, the Indian cellular operator controlled by billionaire Kumar Mangalam Birla, signed a $3.6 billion deal to buy network equipment from Nokia, Ericsson an…
Pedestrians walk past a Vodafone store in Mumbai. Vodafone Idea, the Indian cellular operator controlled by billionaire Kumar Mangalam Birla, signed a $3.6 billion deal to buy network equipment from Nokia, Ericsson and Samsung as part of a three-year capital expenditure plan that will total $6.6 billion (550 billion rupees). The company announced details of the plan in a weekend filing with the National Stock Exchange, promising an upgrade of the networks and a turnaround for money-losing Vodafone Idea Ltd., or VIL. “We are on our journey of VIL 2.0 and from hereon, VIL will stage a smart turnaround to effectively participate in the industry growth opportunities,” Akshaya Moondra, CEO of Vodafone Idea, said in the statement. The company plans to use the capex to expand its 4G coverage and launch 5G service in key markets. The deal will allow the company to use the latest equipment and lower operating costs thanks to the new equipments’ lower energy use. The new equipment will start arriving in the coming quarter. To fund these plans, the company recently raised 240 billion rupees ($2.8 billion) in an equity sale and acquired an additional 35 billion rupees ($418 million) worth of network frequencies in June. The company stated that current capex is being funded by the equity raised, while for long-term capex, the company is in advanced discussions with existing and new lenders to secure 250 billion rupees ($2.9 billion) in funded facilities and 100 billion rupees ($1.1 billion) in non-fund-based facilities. Vodafone Idea had 210 million total subscribers as of the first quarter, and over 80 million, or 40%, are non-4G users who could potentially upgrade to the 4G or even 5G service. In 2018, Vodafone Idea was formed through a merger of Vodafone’s Indian subsidiary and Aditya Birla Group’s Idea Cellular. Since then, the company has reported losses in every quarter as it lost market share to larger competitors: Bharti Airtel, controlled by billionaire Sunil Mittal, and Reliance Jio, controlled by billionaire Mukesh Ambani. Kumar Birla is the fourth-generation head of the Aditya Birla Group and has an estimated net worth of $23.8 billion, per Forbes’ real time data. The conglomerate’s business interests include telecommunications, cement, aluminum, textiles and financial services.
