Vodafone Idea shares rally 14% after $3.6 billion network equipment deal

Vodafone Idea shares: Shares of Vodafone Idea surged by 14 per cent after the company announced a landmark contract worth approximately Rs 30,000 crore ($3.6 billion) with industry leaders Nokia, Ericsson, and Samsung. This deal will supply essential 4G and 5G network equipment over a three-year period, marking it as the largest contract awarded by any Indian telecom operator in 2024.

The stock price rallied to Rs 11.71 on the Bombay Stock Exchange (BSE), a rise of 11.73 per cent, while at the National Stock Exchange ( NSE ), it reached Rs 11.94, representing a robust 14 per cent increase. This positive market reaction comes as Vodafone Idea embarks on an ambitious capital expenditure (capex) plan amounting to approximately $6.6 billion (around Rs 55,000 crore), which was announced earlier this year.

The capex program aims to enhance the company’s 4G population coverage from 1.03 billion to 1.2 billion users, launch 5G services in key markets, and expand network capacity to meet increasing data demands. "This deal is a crucial step in our journey towards VIL 2.0," said Akshaya Moondra, CEO of Vodafone Idea. "We are starting our investment cycle and are committed to a smart turnaround that positions us to leverage industry growth opportunities."

The partnership with established players Nokia and Ericsson, which have been long-time collaborators, is complemented by a new relationship with Samsung, as the company gears up for the 5G era. The first supplies from this extensive contract are expected to begin in the upcoming quarter, signaling a proactive approach by Vodafone Idea to regain market share and improve service offerings.

Despite recent challenges, including significant market share losses to rivals Bharti Airtel and Reliance Jio, Vodafone Idea is determined to revitalise its operations. Earlier in the year, the company successfully raised funds through the largest follow-on public offering in India’s history and has initiated discussions with lenders to secure an additional Rs 250 billion in funding.

Analysts suggest that Vodafone Idea, which has consistently reported losses since its inception from the merger of Vodafone Group and Aditya Birla Group's Idea Cellular in 2018, faces substantial financial hurdles. The Supreme Court recently denied requests from telecom companies, including Vodafone Idea, to recalculate outstanding dues owed to the government, causing some volatility in the stock.

However, this latest development signifies a turning point for Vodafone Idea, as the company aims to regain its footing in a competitive market while prioritising its infrastructure expansion and technological advancements. The focus on enhancing 4G coverage and launching 5G services could potentially reshape its future and restore investor confidence.