Vi’s 4G & 5G Expansion Stalled: Vendor Payment Clash Threatens Network Rollout

Vodafone Idea (Vi) is facing challenges in its plans to quickly expand its 4G network and launch 5G services. The company’s negotiations with European vendors Ericsson and Nokia have hit a roadblock over payment terms.

Stuck on Payment Terms

Vi has been trying to get its global vendors to agree to a new payment option in upcoming contracts. The company wants to pay for new 4G and 5G equipment using a combination of cash and shares. However, Ericsson and Nokia have rejected this proposal, insisting on full cash payments. Sources say that the vendors are concerned about the risks of not receiving future payments from Vi, especially since the company is struggling financially and losing customers.

Vi’s Response and Past Payments

In response to these concerns, Vi stated that it has not requested any vendor to settle payments with shares for new supplies. The company emphasized its commitment to ensuring that its partnerships are beneficial for both parties.

Recently, Vi had issued shares to Nokia and Ericsson to settle some of its old dues, a move that was seen as a one-time arrangement. Before this share issue, Vi owed approximately ₹3,000 crore to Nokia and ₹1,200 crore to Ericsson.

Expanding Vendor Options

Vi has also approached Korea’s Samsung with a similar payment proposal, offering a combination of cash and shares for any future 4G and 5G equipment purchases. However, it is unclear how Samsung has responded, and Vi has not yet placed any orders with the company.

Concerns Over Equipment Swap

There are additional concerns from Nokia and Ericsson about replacing existing Chinese 4G equipment, supplied by Huawei, in five of Vi’s service areas. The vendors are worried about the risks of service disruptions during this massive equipment swap, which could lead to penalties if key performance indicators (KPIs) are not met. Despite these concerns, Vi has denied that any vendor has raised issues about replacing the old equipment.

Vi’s vendors also want the company to take responsibility for the costs associated with swapping out the Chinese gear, which includes significant labor and logistics expenses.

Future Plans

Despite these challenges, Vi’s CEO, Akshaya Moondra, mentioned during the company’s recent Q1FY25 earnings call that they are actively working with vendors to finalize equipment deals. They expect to start receiving deliveries in the quarter beginning October 1. The company is also addressing the challenges related to the 5G rollout in areas where it currently uses Chinese equipment, including Punjab, Bihar, Odisha, Karnataka, and Kerala.

At the time of writing, Ericsson, Nokia, and Samsung had not responded to requests for comment on the matter.