Vodafone Idea to Launch 5G Services in March 2025 with Aggressive Pricing Strategy

Telecom giant Vodafone Idea (Vi) plans to launch its 5G mobile broadband services in March 2025, focusing on aggressive pricing to reclaim market share from competitors.

According to an Economic Times report dated January 2, Vi intends to introduce its 5G services across the top 75 cities in India, prioritizing 17 key circle cities and industrial hubs, which are significant data consumption zones.

Market Performance and Competition

Vodafone Idea’s shares closed at ₹8.13 on January 2, marking a 1.37% rise from the previous day’s closing price of ₹8.02.

Vi competes in the Indian telecom market against Reliance Jio, Bharti Airtel, and the state-owned BSNL.

The company’s entry-level 5G plans are anticipated to be priced up to 15% lower than similar offerings by Jio and Airtel, potentially igniting a price war in the sector.

Enhanced Network Coverage

Vi’s 5G rollout will enhance 4G coverage while deploying 5G in critical locations. A company spokesperson confirmed that Vi holds competitive 5G spectrum in its 17 priority markets, enabling swift deployment.

The spokesperson also stated, “We are gearing up to launch 5G services and are committed to providing the best experience and price.”

To further attract high-value prepaid users, Vi may increase dealer commissions and promotional spending, as suggested by telecom analysts.

“Telco may increase its payouts towards dealer commissions and promotional spends to lure back high-value 5G prepaid users from its bigger rivals,” a senior analyst commented.

Strategic Pricing and Tariff Policies

Vi’s pricing strategy contrasts with recent industry trends, where rivals Jio and Airtel raised their base plan thresholds during the July 2024 tariff revisions.

These increases were aimed at monetizing 5G services. However, Vi’s CEO Akshaya Moondra indicated that the company might keep its 5G base prices lower than its competitors, with final decisions to be made closer to the launch.

Investment and Financial Support

Vodafone Idea’s recent financial activities include securing ₹24,000 crore in equity funding and planning an additional ₹25,000 crore in debt funding.

These resources will support the company’s 5G and 4G network expansion efforts. The government’s waiver of bank guarantee requirements has also facilitated these initiatives.

Global brokerage Jefferies reported that Vi spent approximately ₹3,583 crore (8.4% of sales) on dealer commissions in FY24, surpassing Jio’s ₹3,000 crore (3% of sales) but falling short of Airtel’s ₹6,000 crore (4% of sales).

Collaborations and Infrastructure Development

Vi has finalized $3.6 billion (₹30,000 crore) worth of contracts with Nokia, Ericsson, and Samsung for 4G network enhancement and 5G infrastructure deployment.

The company aims to install 75,000 5G sites over the next three years. Initial rollouts will utilize a mix of 3.5 GHz (C-band) and 1,800 MHz spectrum to improve connectivity and user experience.

Focus on Customer Experience

PwC India’s telecom leader Vinish Bawa emphasized that the competition for 5G subscribers will depend on network performance and customer experience.

With Jio and Airtel already serving 148 million and 105 million 5G users, respectively, Vi’s ability to deliver reliable services at competitive prices will be critical.

Analysts caution that while aggressive pricing may attract users, it could also hinder average revenue per user (ARPU) growth, potentially exacerbating Vi’s financial challenges.

Shareholder Insights and Future Plans

On January 2, Vodafone Idea’s shares traded at ₹8.04 on the NSE, a 0.37% increase from the previous closing price of ₹8.01.

Citi’s recent analysis maintained a ‘Buy/High Risk’ rating for Vi stock, with a target price of ₹13 per share, representing a potential 67% upside from its previous close of ₹7.77.

Vi’s Extraordinary General Meeting (EGM), scheduled for January 7, will seek shareholder approval for a preferential allotment of shares worth ₹1,980 crore to Vodafone Group Plc at a price of ₹11.28 per share.

The outcome will influence the company’s future financial trajectory and market performance.