Vodafone Idea to launch 5G by March 2025, cheaper plans could trigger price war: Report

Vodafone Idea (Vi) is reportedly preparing to launch its 5G mobile broadband services by March with competitively priced plans to attract customers from rivals Reliance Jio and Bharti Airtel, both of which already have nationwide 5G networks in place.

The company is expected to introduce entry-level 5G plans priced up to 15% lower than comparable offerings from Jio and Airtel, potentially triggering a price war in the telecom sector, according to industry experts monitoring broadband tariffs.

“We are gearing up to launch 5G services and are committed to providing the best experience and price,” ET quoted a Vi spokesperson as saying, adding that the telecom company holds sufficient spectrum in its priority markets to enable rapid 5G deployment and enhance its existing 4G network.

Market analysts speculate that Vi may also tweak its distribution strategies to regain high-value customers. This could include increased dealer commissions and promotional expenses to lure back users who have migrated to its larger competitors.

As per global brokerage Jefferies, Vi spent around ₹3,583 crore, or 8.4% of its sales, on dealer commissions in FY24, much higher share than Jio’s ₹3,000 crore (3% of sales).

Currently, Jio and Airtel have 148 million and 105 million 5G users, respectively, as of September-end. Analysts caution that Vi’s aggressive pricing strategy must strike a balance to avoid dampening its Average Revenue Per User (ARPU) growth, given its already strained financial position, according to the ET report.

The report suggests that the Vodafone Idea’s initial 5G rollout would leverage a mix of 3.5 GHz (C-band) and 1,800 MHz spectrum bands to deliver services in its targeted regions.

Vodafone Idea has secured ₹24,000 crore in equity funding and plans to raise an additional ₹25,000 crore in debt, following the government’s recent waiver of bank guarantee requirements. The waiver has allowed the company to finalise ₹30,000 crore ($3.6 billion) worth of deals with global network vendors Nokia, Ericsson, and Samsung.

Vodafone Idea last week said the latest "relief" will boost 4G and 5G investments in India.

"This step of BG waiver is a clear indication of the government's continued support to the telecom industry. It will ensure that the exposure of the banking system is utilised by telecom operators towards further proliferation of 4G and 5G networks in India," the company said in a BSE filing.

The Department of Telecom (DoT) in a communication dated December 27, 2024, has dispensed with the requirement of submission of Financial Bank Guarantees for the spectrum acquired in auction held in 2012, 2014, 2015, 2016 and 2021, subject to certain terms and conditions.