Vodafone Idea shares soar 8% after securing $3.6 billion deal with Nokia, Ericsson, Samsung

Shares of Vodafone Idea climbed as much as 8.96 percent, reaching Rs 11.42 per share on the BSE.

This deal is a major step in Vodafone Idea's ambitious three-year capital expenditure (capex) plan, which totals approximately $6.6 billion (Rs 550 billion).

The company's goal is to expand its 4G coverage from 1.03 billion to 1.2 billion people, launch 5G services in key regions, and enhance capacity to meet increasing data demand, according to a stock exchange filing on Sunday (Sept. 22).

While the company has maintained its long-standing partnerships with Nokia and Ericsson, it has also brought Samsung on board as a new partner.

Following the recent equity raise of Rs 240 billion and the acquisition of additional spectrum worth Rs 35 billion during the June 2024 auction, Vodafone Idea has swiftly executed initial capex projects.

These efforts include deploying more spectrum on existing sites and setting up new sites, which has resulted in an approximate 15 percent increase in capacity and extended population coverage by 16 million as of September 2024.

“The current capex is being funded through the equity raised. For long-term capital needs, Vodafone Idea is in advanced talks with both existing and new lenders to secure Rs 250 billion in funding and Rs 100 billion in non-fund-based facilities,” the company stated in its BSE filing.

Last week, Vodafone Idea faced heavy selling pressure after the Supreme Court of India rejected telecom companies' plea for a reassessment of adjusted gross revenue (AGR) dues.

During its Q4FY24 earnings call, Vodafone Idea’s management mentioned they were seeking a Rs 60 billion adjustment in the base AGR figure and a reduction of Rs 350 billion (out of the approximately Rs 700 billion owed) due to interest, penalties, and interest on penalties.

However, the Supreme Court’s rejection of the plea is a significant blow to Vodafone Idea’s recovery prospects.

In response, Vodafone Idea shares plunged nearly 15 percent in one week and over 28 percent in one month.

The stock has dropped by more than 33 percent over the past three months and nearly 29 percent year-to-date (YTD).