Vodafone Idea (Vi) has stopped making large orders to the telecom vendors. The company is doing so because of its hurt cash flow. Even the vendors aren’t too eager to provide the telco with very large orders hence keeping their exposure to the company’s struggling finances lower. According to an ET Telecom report, a senior official of Vodafone Idea said that the volume of orders placed with the telecom vendors has come down significantly. The limiting of orders has been done to reduce the exposure to the company for these vendors.
Vi Had Placed Add-On Orders With Multiple Telecom Vendors
In the last quarter of FY21, Vodafone Idea had placed ‘add-on’ orders with vendors including Ericsson, Nokia, and Huawei. This add-on contract is for helping the company with its network expansion. A person related to the matter told the publication that Vi had offered new contracts that ranged between $40-$60 million in the last quarter of FY21. All of the concerned vendors are only interested in providing Vodafone Idea with limited orders when they can see that they will be paid for that without any issues. With limited orders, both telecom vendors and Vi are in a win-win situation. The vendors get their money, and Vi does not need to pile on more debt.
Vodafone Idea Needs Tariffs to Go Up
Vodafone Idea said that new investors aren’t coming on board given the situation of the market. Even Sunil Bharti Mittal, Chairman of Bharti Airtel, had said recently that the telecom industry’s health is not good. Because of lower tariffs and the company being cash flow negative, the investors aren’t too keen on giving money to Vodafone Idea. But if things were to change soon in regards to the tariffs and further market’s health, it might bring in fresh investments for Vodafone Idea. Service-wise, Vodafone Idea has improved majorly. The telecom operator has been expanding its LTE 900 presence in over 11 circles at select locations. This stands to improve the customer experience. Vi’s woes can only be solved by faster subscriber addition, fresh investments, and higher tariffs. The telco stands in a position where all of this can happen.
