Vodafone Idea Nokia Ericsson Deal: Vodafone Idea’s share price has increased by over 8 per cent as it closes a $3.6 billion network equipment deal with Nokia, Ericsson, and Samsung.
Vodafone Idea News Today
Vodafone Idea stock surged more than 8 per cent in early trade on Monday after the company said it had completed the $3.6 billion agreement with Nokia, Ericsson, and Samsung. This deal to expand its 4G and 5G network capabilities saw Vodafone Idea shares touch ₹11.42 on the Bombay Stock Exchange (BSE).
The new network equipment deal is an essential part of Vodafone Idea’s three-year capital expenditure (Capex) plan worth approximately USD 6.6 billion (₹550 billion). Plans will upgrade the 4G population coverage from 1.03 billion to 1.2 billion, introduce 5G in critical markets, and enhance network capacity as data demand keeps rising.
The consolidation of Vodafone Idea with its long-time partners Nokia and Ericsson and now with the new partner Samsung plans to steer the quality and connectivity of its telecom services. According to the reports, the share price of Vodafone Idea has increased by 8.96% in response to the advent of this collaboration and appeared in the financial media platforms.
Vodafone Idea Share Future
Its September 22 stock exchange filing shows that this deal is part of a broader Capex programme for upgrading network infrastructure. After recent equity raises of ₹240 billion and another spectrum acquisition of ₹35 billion in the June 2024 auction, Vodafone Idea has initiated short-term Capex, deploying more spectrum and adding new network sites.
These have translated into the increase of network capacity by 15% and additional population coverage of 16 million that the company expects to reach by the end of September 2024. The expansion is so far funded by the equity raise of the company, while Vodafone Idea has had advanced talks with the lenders for long-term funding for Capex, which the company is hoping to raise to ₹250 billion in funding and ₹100 billion in non-fund-based facilities.
Vodafone Idea’s AGR Dues Setback
Still, this has been a silver lining in a somewhat bumpy ride thus far. Still, the enormous blow for Vodafone Idea came in rejecting its plea for re-computation of adjusted gross revenue (AGR) dues by the Supreme Court of India. It was expecting a correction in the base AGR amount by ₹60 billion and a reduction in total AGR liability by ₹350 billion. The negative impact left its mark on the stock as it corrected sharply by 20% last week.
Nuvama Institutional Equities said that the verdict of SC dented the revival prospects for Vodafone Idea. However, the stock’s 20 per cent plunge primarily reflected added liability more than the market expected. Subsequently, one will look at the operational progress made by Vodafone Idea in terms of subscriber retention and tariff hikes or execution of Capex.
Vodafone Idea Share Update: Market Performance
Vodafone Idea shares have gone wild in the last two months. On one end, the stock surged 8.96% on Monday; on the other hand, at one stage, it had slipped nearly 15% in a week and over 28% in the last month. So far in the year, Vodafone Idea has been down around 29%, revealing that this telecom player is in the throes while the company remains in restructuring mode.
A week ago, shares had gained 11.33% to ₹11.33 at 9:30 am on Monday on the BSE.
Vodafone Idea Outlook
Despite the blow from the AGR ruling, the Vodafone Idea-Nokia-Ericsson deal seems to be a step in the right direction for the telecom giant. As Vodafone Idea continues with its three-year Capex plan and approaches long-term funding, the delivery of the expansion plan for its network and 5G rollout will be the critical focus areas towards recovery and growth.
Nuvama Institutional Equities remains on the sidelines, rating Vodafone Idea shares ‘Hold’. It has projected the target price of ₹11.5 per share in 12 months.
FAQ:
What is happening with the Vodafone Idea?
On Sunday, Vodafone Idea, which is debt-ridden, announced that it has locked in contracts with ₹30,000 crore approximately with Nokia, Ericsson, and Samsung to source its telecom equipment for three-year 4G network expansion and three-year 5G rollouts.
What is the prediction of Vodafone Idea?
Vodafone Idea is predicted to grow its earnings and revenue per annum.
What is the future of Vodafone Idea?
Vodafone Idea wants to expand its distribution footprint and digitally intensify its outreach to win customers. It is also upgrading what it has for existing customers through strategic partnerships.
