Vi Announces $3.6 Billion Deal with Samsung, Nokia Amidst Bid to Survive, Shares Rise 8%

Vodafone Idea shares surged by more than 8 per cent after the telecom company announced a mega-deal, worth $3.6 Billion (Rs 300 Billion) with Nokia, Ericsson and Samsung for the supply of network equipment for three years.

At 12:10 am, the shares of the telecom company were trading at Rs 11.06 price level, up by nearly 5.64 per cent on the National Stock Exchange.

Vodafone Idea's shares even came back above their FPO price post the announcement. In a regulatory filing on September 22, the debt-ridden company stated that "the deal marks the first step towards the rollout of the company’s transformative three-year capex plan of $6.6 billion (Rs 550 billion)."

"The capex programme is directed towards expanding the 4G population coverage from 1.03 billion to 1.2 billion, launching 5G in key markets and capacity expansion in line with data growth," the release further added.

Can Vodafone Idea’s mega deal save its struggling bottom line?

The cash-strapped telecom company has been under massive pressure owing to its rising debt levels and a shrinking subscriber base, primarily because of its rivals Jio and Bharti Airtel.

As for now, Vodafone Idea's mega-deal comes at a challenging time when the broader telecom industry is also facing a larger subscriber loss post the tariff hikes.

Recent data from the Telecom Regulatory Authority of India (TRAI) showed that Bharti Airtel lost 1,694,300 subscribers whereas Vodafone Idea's subscriber base also decreased by 1,413,910 subscribers.

Mukesh Ambani-led Jio, as well, witnessed a decline of 758,463 subscribers. However, BSNL managed to grab an opportunity here with its market share increasing from 7.33 per cent in June 2024 to 7.59 per cent in July 2024.

The telecom company's recent equity raise, worth Rs 240 billion, and Rs 35 billion spectrum acquisition in the June 2024 auction are some major steps it has taken so far.  

As per its press release, it has also executed quick-win capital expenditures, increasing capacity by about 15 per cent and expanding population coverage by 16 million by September 2024. While the telecom company continues to take steps to improve its positioning in the industry, analysts remain concerned about the debt levels of the company.