Ahead of auctions, Vodafone Idea surrenders spectrum in two circles

The spectrum surrendered was up for renewal after a 20-year lease period.

In the absence of timely auction, the government had last month approved interim allocation of spectrum to telcos for renewing the expired spectrum at earlier reserve price, and the balance amount if any was to be adjusted after the auction.

Vodafone Idea, however, decided not to opt for renewing the spectrum. Instead, it is expected to renew the spectrum in 900 MHz in these two circles in the auction, officials said.

“Upon assessing our usage and needs, we have surrendered some spectrum in both West Bengal and UP East. We remain committed to providing seamless services to our customers while also focussing on optimising for operational efficiency and future growth,” a Vodafone Idea spokesperson said.

One of the factors which prompted the company not to renew the spectrum, could be to save itself from further burdening its already weak financial position.

Vodafone Idea has 12 MHz spectrum up for renewal in the 1800 MHz and 900 MHz band in two circles. At reserve prices, this would result in spending of Rs 1,500 crore.

However, analysts believe that since the company has ample spectrum in renewal circles in 1800 MHz band, it may opt not to renew spectrum in the 1800 MHz band, but could go for renewal in the 900 MHz band, especially in West Bengal circle.

“Re-farming 900 MHz towards 4G leading to better consumer experience,” the company said in its investor presentation on Tuesday. The company has in total 8,005 MHz spectrum.

The upcoming spectrum auction, which will see airwaves worth over Rs 96,317.65 crore across bands being put up for sale, will start from May 20.

Currently, Vodafone Idea is focusing on its 17 priority circles, which contribute 98% to its topline. Ahead of the 5G services launch and spectrum auction, the company said it has sufficient spectrum to support migration of its entire 4G user base to 5G.

On the 5G rollout, Vodafone Idea said a late adoption of 5G in the country will help it to rollout its services in a cost-effective manner using the latest advanced technology.

The company is looking to raise Rs 45,000 crore in equity and debt. The much needed funding will help Vodafone Idea to pay its debts, improve its network, as well as launch 5G services. The telecom operator would need about six-to-seven months to rollout 5G post completion of funding, its CEO Akshaya Moondra had said in January.

In its investor presentation Vodafone Idea also said that it has completed government’s minimum 5G rollout requirement in four circles with four vendors.

“For 5G, the target is to cover 40% of the revenues in first 24 to 30 months,” the company said.

Vodafone Idea had lost 4.6 million mobile subscribers, taking its user base to 215.2 million at the end of December. The same happened owing to continuous migration of users to peers – Jio and Airtel, as well as Vodafone Idea’s increase in entry-level tariffs.

The company said it will focus on expanding the 4G footprint in rural and semi-urban growth markets to drive average revenue per user (Arpu).

Vodafone Idea’s net loss for the October-December quarter narrowed to Rs 6,986 crore from Rs 8,738 crore in the preceding quarter. The company’s revenues from operations during the period fell 0.4% q-o-q to Rs 10,673.1 crore.