Vodafone Idea shares rally on 5G launch in Mumbai; should you buy?

Vodafone Idea (Vi) stocks rose more than 5 per cent on March 19 as the company reported that it would introduce its 5G services in Mumbai. The stock rose to an intraday high of Rs 7.47, a sign of optimism from investors over the telecom giant's much-awaited 5G rollout.

VI’s exchange filing stated that the rollout aims to enhance user experience with extensive coverage and competitive pricing. The telecom company has partnered with Nokia for next-gen network equipment to make the service more energy-efficient and sustainable. Additionally, the company has integrated AI-powered Self-Organizing Network (SON) technology to optimize performance dynamically.

Competitive pricing and expansion plans

For attracting new customers, VI has introduced an unlimited 5G data introductory offer from plans priced Rs 299 onward, one of the most aggressive in the segment. It will continue to push harder towards strengthening video streaming, online gaming, and high-speed data downloads.

In spite of this drive, VI lags behind Bharti Airtel and Reliance Jio, both of which have already finished pan-India 5G rollouts. Vodafone Idea is going to spend Rs 50,000-55,000 crore on enhancing 4G and 5G coverage in the next three years, covering 90 per cent of India's population.

Vodafone Idea's financial position and stock performance

In the last year, VI has collected Rs 26,000 crore in equity, comprising India's sizing-biggest-ever follow-on public offering (FPO) of Rs 18,000 crore as well as a Rs 4,000 crore promoter injection. This money will go towards pumping up capex as well as driving network growth at a faster clip.

Despite today’s gains, Vi shares are still down 61 per cent from their 52-week high of Rs 19.15 (June 2024). The stock has rebounded 13 per cent from its 52-week low of Rs 6.6 (November 2024) but remains in a downtrend, losing 45 per cent of its market value over the last year.

MOFSL raises concerns over Vi’s future competitiveness

Motilal Oswal Financial Services (MOFSL) remains cautious on VI’s long-term viability, stating that the company is unlikely to gain meaningful market share, despite its massive capex plans.

The brokerage believes Reliance Jio and Bharti Airtel have a financial edge and better free cash flow (FCF) generation. MOFSL prefers Bharti Airtel and Reliance Industries (RIL) as top telecom picks due to their stronger balance sheets.

With recent tariff hikes, MOFSL noted that Bharti Airtel has benefited the most, while Jio is expected to see delayed gains as many of its subscribers are locked into long-duration plans. The brokerage anticipates another 15 per cent tariff hike in December 2025, with operators likely shifting to usage-linked pricing models for sustainable ARPU growth beyond FY27.

Vi’s path ahead: Challenges remain despite 5G push

While the 5G rollout in Mumbai is a milestone for Vi, the company faces an uphill battle in the Indian telecom space. With high debt, weaker financials, and aggressive competition from Jio and Airtel, analysts remain skeptical about Vi’s long-term market positioning.

For investors, Vi’s stock remains a high-risk, high-reward bet, with near-term upside driven by 5G expansion but long-term uncertainties around revenue growth, profitability, and market share retention.