Vodafone Idea anticipates 5G rollout in 6-9 months post FPO fund raising

Bengaluru: Private telecom operator Vodafone Idea on Monday said it expects 5G rollout to kickstart within 6-9 months post the issue of a Rs 18,000 crore further public offering, which is touted to be the largest in the country by a private entity. 

A sum of Rs 5,720 crore from the overall proceeds has been allocated for the rollout, as per the red herring prospectus. Company Chief Executive Akshaya Moondra said that the target is to cover 40 per cent of Vodafone Idea’s overall revenue base from 5G services within 24-30 months. 

While Moondra divulged that negotiations with 5G equipment vendors are on, he did not share any further details.

It must be noted that rival Bharti Airtel and Reliance Jio have already rolled out 5G services to their respective clients.

The price band for the FPO issue that opens for retail investors on Thursday and closes on Monday, has been set at Rs 10-11 apiece. Bids can be made for a minimum of 1,298 equity shares and in multiples of the same thereafter.

Vodafone Idea plans to utilise a cumulative Rs 12,750 crore from the FPO exercise for setting up new 4G and 5G sites, alongside expanding the capacity of existing and new 4G sites. Other items on the agenda include settlement of certain deferred spectrum payments to the Department of Telecommunications and the GST thereon, amounting to Rs 2,175 crore, besides expenditure on general corporate purposes.

Going forward, Moondra alluded to expectations tied to telecom tariff hikes, however, refused to share a timeline for the same. “India has amongst the lowest average revenue per user amongst major economies of the world…secondly, none of the operators in India are returning their cost of capital,” he reasoned, adding that the average revenue per user will increase by way of upgradation.

Following the FPO, the government’s shareholding in the entity will fall to 24 per cent, from 32per cent currently.

Axis Capital, Jefferies India and SBI Capital Markets are the book running lead managers for the FPO exercise.