Shares of Vodafone Idea Ltd (VIL) are in focus on Wednesday morning after the telecom operator launched 5G services in Mumbai, with an aim to expand mobile coverage at competitive pricing. In a press release, VIL said its 5G introductory offer provides unlimited 5G data for subscribers on plans starting at Rs 299, making it the most competitively priced option in the market.
In the last 12 months, the telecom operator has raised equity of Rs 26,000 crore, including the largest FPO in India of Rs 18,000 crore and promoter contribution of Rs 4,000 crore, driving its capex deployment. With the total planned capex investment of Rs 50,000-55,000 crore over the next three years, VIL is looking towards expansion of its 4G network to cover 90 per cent of Indians, in addition to launch of 5G services in key geographies, to continuously enhance the customer experience.
"We do not expect Vi to become competitive, despite its large capex plans. We believe RJio and Bharti are still likely to continue gaining market share at Vi’s expense, given their deeper pockets and superior FCF generation. We continue to prefer Bharti Airtel and RIL in the telecom space," MOFSL said in a March 17 note.
The Vodafone Idea stock has declined 11 per cent in 2025 so far. It lost 45 per cent of its market value in the past one year. MOFSL noted that the pass-through of the July 2024 tariff hikes has seen divergent trends, with Bharti Airtel being the biggest beneficiary in the last two quarters.
"We believe the tariff hike benefits are already reflected for Bharti and Vi, while we expect RJio to see a delayed benefit, likely due to a larger proportion of its subscriber base on longer-duration plans. Given the consolidated market structure in the Indian telecom industry, higher data consumption, lower ARPU, and inadequate returns generated by telcos, we expect one more tariff hike and build in 15 per cent tariff hike in December 2025," it said.
MOFSL believes telecom operators may need to change the pricing construct to usage-linked plans for the ARPU growth to sustain beyond FY27.
"To ensure users get the best connectivity experience, Vi has partnered with Nokia, integrating the latest generation of equipment in its 5G rollout in the city, designed to not only be leaner, but also energy efficient, making the network more sustainable. Additionally, Vi has also deployed an AI-based SON (Self-Organizing Networks) system, which continuously optimizes network performance to ensure the best consumer experience," Vodafone Idea said.
With the launch of 5G, VIL is further strengthening its network to meet the growing demand for high bandwidth applications such as streaming, gaming and real time cloud access, it added.