Vodafone signs $3.6 bn deal with Nokia, Ericsson, Samsung

Vodafone Idea Ltd has signed a $3.6 billion deal with Nokia, Ericsson and Samsung Electronics for the supply of equipment to upgrade its network.

The deal is part of the telecom firm’s $6.6 billion three-year capital expenditure plan to expand the 4G coverage, launch 5G in key markets and expand its network capacity to accommodate increasing data demands.

Shares of the company jumped about 12% to an intraday high of ₹11.71 per share from its previous close of ₹10.48 per share.

While Ericsson and Nokia are existing vendors to Vodafone Idea, Samsung has been added as a new partner, the company told the stock exchanges on Sunday.

The telecom firm had raised $2.2 billion through a share sale in April, and will fund the latest deal with that money, it said.

The company is also in advanced talks with lenders to secure ₹35,000 crore  (about $4 billion) of loans and bank guarantees, according to the statement. The supply of the telecom gear is expected begin in the coming quarter.

“We are on our journey of VIL 2.0 and from hereon, VIL will stage a smart turnaround to effectively participate in the industry growth opportunities,” Akshaya Moondra, chief executive officer at  Vodafone Idea, said. “Nokia and Ericsson have been our partners since our inception and this marks another milestone in that continuing partnership. We are pleased to start our new partnership with Samsung.”

The telecom firm, has, meanwhile, called an emergency meeting with investors and analysts on Monday, 23 September, to address concerns over a Supreme Court order dismissing petitions of several telecom operators, including Vodafone Idea, concerning the re-computation of adjusted gross revenue (AGR) dues.

“Vodafone Idea Ltd will host a conference call with its senior management to provide updates on recent developments,” the company said in a separate statement. The call will include Moondra and chief financial officer Murthy G.V.A.S., and other senior executives.

AGR is the total revenue earned by telecom companies, including revenue from telecom and non-telecom sources such as rent or dividends.

The government uses AGR to calculate licensing fees and spectrum usage charges that telecom operators must pay.

The dispute arose over what should be included in AGR, with telecom firms arguing for excluding non-telecom revenue, while the government insisted all revenue should be included.