Can Vodafone Idea meet its 5G rollout obligations?

Can Vodafone Idea meet its 5G rollout obligations?

Having confirmed its acquisition of a 32% stake in Vodafone Idea, and helped to alleviate bankruptcy concerns hovering over the company, the Indian government is reportedly insisting that the country’s third-largest operator must press ahead with 5G rollout.

We reported on Monday that Vodafone Idea said it had partnered with Motorola to ensure the smartphone maker’s devices work on Vodafone Idea’s 5G network in Delhi. This implies a possible 5G launch in the national capital.

Indeed, the Economic Times news service suggests that the government expects Vodafone Idea to start 5G rollouts soon in line with minimum rollout obligations after having bought 5G spectrum in last year's auction.

The Mint news service says, however, that the operator will need an investment of $6 billion-$8 billion in 5G and fibre and infrastructure upgrades, to stay competitive. This could be a problem given high levels of debt, continuous loss of subscribers and market share erosion.

However, the network rollout obligations are clear: commercial launch of 5G services anywhere in each of the three metros within the first year after spectrum allotment, which, in the case of Reliance Jio, Bharti Airtel and Vi was mid-September 2022.

Also, at least one city has to be provided with 5G in each of India's 22 telecom circles (or service areas). Non-compliance means a financial penalty, and potentially, after a year, return of the spectrum.

Vodafone Idea has not yet offered a timetable, but the government’s position sems to be clear. Telecom Secretary K Rajaraman, quoted in the Economic Times, says: "We have sold the spectrum to them, and we expect them to roll out because there are minimum rollout obligations."

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