Vodafone Idea’s 5G rollout comes with a side of satellite internet FOMO

New Delhi: Vodafone Idea Ltd is discussing ways to catch up with larger rivals Reliance Jio and Bharti Airtel Ltd in the domestic satellite internet race, even as it is set to roll out its 5G cellular broadband network.

Jio and Airtel recently announced partnerships with US-based Starlink Services to roll out Elon Musk’s satellite internet service in India, although they will have to wait for government approvals.

Vodafone Idea, India’s third-largest telecom service provider, may look to offer services enabled by satellite internet such as high-speed internet in remote areas where fiber cables needed for fixed-line broadband are not yet available, said chief technology officer Jagbir Singh.

“There are some internal discussions ongoing (on launching satellite internet services),” Singh told Mint in an interview. “There are open questions like the cost of the devices and regulatory approvals on using satellite for terrestrial connectivity.”

That said, Vodafone Idea doesn’t have any partnerships in the satellite internet space, unlike Jio and Airtel. Apart from the Starlink partnership, Jio has a joint venture with Luxembourg-based SES and Airtel with London-based Eutelsat One Web to offer satellite internet in India.

Vodafone Idea is launching its 5G services in key Indian cities beginning Wednesday, more than two years after its rivals kicked off their high-speed cellular networks. In the December quarter, the telecom operator’s subscriber base declined 7.1% from a year earlier to 199.8 million, although it managed to narrow its net loss to 6,609 crore from 6,986 crore.

Also read | Everyone’s punting on Vodafone Idea. Is it worth the risk?

“Vodafone Idea is currently focusing more on 5G. Its business will not be affected in the near to medium term due to partnership of rivals with Starlink,” said Prashanth Tapse, senior vice president–research, at Mehta Equities, a broking firm.

The Indian government has decided that the spectrum for satellite internet will be allocated administratively but the final allocation is still pending.

California-based Starlink is the largest player in the satellite communications space globally, controlling a constellation of nearly 7,000 small satellites in earth’s lower orbit. Jeff Bezos’ Amazon Ltd also runs an initiative called Project Kupier to provide high-speed satellite broadband services.

As of December, Starlink had more than 4.6 million subscribers globally.

Also read | Satellite internet services may finally commence by June 2025

Vodafone Idea’s expansion amid hurdles

Vodafone Idea is targetting 75,000 sites across India for rolling out its 5G services over the next three years. In April last year, the telecom operator raised 18,000 crore through a follow-on public offer to expand its network infrastructure.

Its average revenue per user (ARPU) marginally improved to 173 in the December quarter from 166 a year earlier, although it is lower than Jio’s 203 and Airtel’s 245.

“We have done profiling of customers in places where we are deploying 5G to identify places where density of 5G usage is high. We will use a targeted approach to better serve our customers and offer a good experience,” said Singh, Vodafone Idea’s CTO.

As Vi executes its expansion plan entailing a capital expenditure of 50,000-55,000 crore over the next three years, its management remains confident of resolving the pending issue of adjusted gross revenue (AGR) dues to the government, which is about 80,000 crore.

AGR is used to determine the revenue that telecom companies must share with the government towards spectrum licensing charges. The government is the largest shareholder in Vodafone Idea with a 23% stake.

“Government is actually the largest stakeholder in this entire exercise, so they are cognizant of this fact and (we are) confident that they will find a solution,” Vodafone Idea chief executive Akshay Moondra said during the company’s post-earnings call with analysts on 12 February.

Also read | Supreme Court junks Bharti Airtel, Vodafone Idea’s pleas on miscalculation in AGR dues

Despite the company’s focus on expanding its 5G network, analysts remain cautious about its prospects.

“Before posting growth in their subscriber base post rollout of 5G we should first see subscriber retention by Vi, which is needed for sustainable operations,” said Tapse of Mehta Equities.

JM Financial analysts Dayanand Mittal and Shivam Gupta added in a 23 February note that Vodafone Idea’s “long-term sustainability is still contingent on significant favourable government support”, and that the company needs to boost its ARPU to over 370 by financial year 2027 to meet its dues to the government.

Also read | Starlink, Airtel and Jio: A trifecta to transform India’s digital future

 

  • Aniket Pujari

    Aniket Pujari

    Aniket Pujari, a graduate in Financial Markets, is the founder of Minute To Know News, a digital platform providing daily news updates on cryptocurrencies, finance, and economics. With a passion for finance and technology, Aniket has been exploring the world of cryptocurrencies since 2015, building a deep understanding of these rapidly evolving industries.

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