Vodafone Idea’s shares gained 2.42% on December 13, 2024, reaching ₹8.05 per share after the company unveiled an ambitious capital expenditure (capex) plan worth ₹50,000-55,000 crore over the next three years. This plan is aimed at expanding and upgrading its 4G and 5G network infrastructure to enhance its market position in the highly competitive Indian telecom sector.

The company’s announcement comes as part of its ongoing efforts to improve network capacity and coverage. Vodafone Idea revealed that it had already invested more than ₹2,000 crore in the first half of FY25, which resulted in a 14% increase in its 4G data capacity. This improvement also led to a significant growth in 4G population coverage, adding 22 million new users during this period. The company is now looking to ramp up its capex further, with ₹8,000 crore allocated for the second half of FY25. This investment will focus on expanding network coverage and improving service quality.

The announcement of the extensive capex plan has reignited investor confidence in Vodafone Idea, which has faced financial challenges in recent years. The company’s plan to invest heavily in upgrading its network comes at a critical juncture, as it strives to remain competitive against larger telecom operators like Bharti Airtel and Reliance Jio.

Another factor contributing to the positive stock movement is Vodafone Idea’s indication that it may implement further tariff hikes in the future. The company stated that a price increase is necessary to generate reasonable returns and support its investments. The statement emphasized that tariffs in India are significantly lower than in other comparable markets, and given the inflationary pressures, prices need to catch up with increased usage. Despite a recent tariff hike in July 2024, the company pointed out that the last hike before that occurred in November 2021, and a further adjustment in pricing would be essential for the company’s long-term viability.

Vodafone Idea’s capex plan has been partly funded through its recent follow-on public offer (FPO), which raised substantial capital. In October 2024, promoter Kumar Mangalam Birla highlighted that the FPO was the largest of its kind in India, with bids exceeding ₹90,000 crore. The FPO response, according to Birla, was an emphatic endorsement of the potential of the Indian telecom sector.

The company has already signed the first phase of its capex deals, valued at $3.6 billion, with global telecom equipment giants Nokia, Ericsson, and Samsung. These partnerships are expected to play a crucial role in executing the network upgrades and expansions over the next few years.

Vodafone Idea’s financials and stock performance have been under pressure for some time, but this strategic investment in network expansion, coupled with the potential for tariff hikes, could provide a much-needed boost. As the company accelerates its efforts to enhance its 4G and 5G infrastructure, investors are hopeful that Vodafone Idea can turn its fortunes around and regain a stronger competitive position in the telecom industry. The stock’s 2.42% rise reflects positive sentiment surrounding the company’s growth prospects and the telecom sector’s future potential.

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