Vodafone Idea (Vi) is preparing to launch its 5G mobile broadband services in March with competitive pricing to draw clients away from competitors Reliance Jio and Bharti Airtel, who currently provide statewide 5G networks.
Vi plans to first introduce 5G in 75 cities among its 17 priority circles, concentrating on industrial centers with significant data usage. According to industry analysts, the company's entry-level 5G contracts may be up to 15% less expensive than Jio and Airtel's existing offerings, which could lead to a pricing war.
According to a Vi representative, the company has enough 5G spectrum in its key areas to expand 4G coverage and quickly roll out 5G. The corporation may also modify its distribution strategy by raising dealer commissions and advertising spending in an effort to win back valuable prepaid customers from rivals.
According to global brokerage Jefferies, Vi spent over Rs 3,583 crore (8.4% of sales) on dealer commissions in FY24, which was more than Jio's Rs 3,000 crore (3.4% of sales) but less than Airtel's Rs 6,000 crore (4.4% of sales).
As part of their monetization strategy, Jio and Airtel recently increased the thresholds for their base plans for 5G access during the July 2024 tariff changes, encouraging customers to switch to higher-value plans.
However, some analysts warn that extreme price cuts may stifle Vi's average revenue per user (ARPU) growth, exacerbating the company's financial problems. Despite this, Vi's recent equity investment of Rs 24,000 crore and an expected loan funding of Rs 25,000 crore, made possible by the government's removal of bank guarantee restrictions, provided the telecom with the resources it needed to build its network and regain market share.
4G and 5G network expansion
Vi has signed $3.6 billion (Rs 30,000 crore) contracts with global vendors Nokia, Ericsson, and Samsung to expand its 4G network and develop 5G infrastructure. Over the next three years, the business expects to install 75,000 5G sites while also accelerating network growth to boost connection and user experience. Vi will initially roll out 5G services using a combination of 3.5 GHz (C-band) and 1,800 MHz spectrum.
