Reliance Jio nearly doubled its capital expenditure in 2021-2022 fiscal. As per its quarterly reports, Reliance Jio’s capital expenditure on its network increased by nearly 105 per cent to ₹22,800 crore in 2022 fiscal from ₹11,100 crore in capital expenditure during FY21.
Jio’s capital expenditure for FY22 is nearly 55 per cent higher than its nearest competitor Bharti Airtel, which invested about ₹14,735.2 crore into its network in the previous financial year. Vodafone Idea on the other hand invested about ₹5,776.3 crore into its network in the same time period, thus spending only a quarter of what Jio spent in FY22.
Fiscal 2023 is set to be the year when each operator will bolster its capital expenditure in order to set up the first iteration of its 5G network.
Auctions
Ahead of the auctions, it is common knowledge that Reliance Jio is financially best placed to not only participate in the auctions but also make the necessary investments in order to set up their 5G network. Bharti Airtel founder, Sunil Bharti Mittal has previously told BusinessLine that Airtel is sufficiently funded as well to participate in the auctions. Vodafone Idea continues to lag behind, however, and is in desperate need of funds to increase its capital expenditure in the coming time. In their earnings call, Vodafone Idea CEO Ravinder Takkar also noted that fundraising for the company is imminent.
Vodafone Idea
Going by their earnings report released for Q4-FY22, Vodafone Idea has increased capex by at least 28 per cent during FY22 in comparison to FY21, when the company reported a figure of nearly ₹4,495.2 crore in FY21 in investing activities (these include, the purchase of property, plant equipment and other intangible assets). Given the minuscule nature of spectrum payments the company made, upon the anonymous expert’s advice, BusinessLine has taken the investment amounts reported by Vodafone Idea to be purely for capital expenditure.
Bharti Airtel
For FY21 and FY22, Bharti Airtel has invested nearly similar amounts into their networks at ₹14,766.6 crore and ₹14,735.2 crore respectively. BusinessLine’s estimates of the capex exclude capital expenditure in the North East and Rajasthan circles, since it is a part of Bharti Airtel’s subsidiary Bharti Hexacom, and thus not reported in its stand-alone balance sheets.
4G towers
According to the industry expert, Reliance Jio has the largest amount of 4G towers at present, at 3,20,000. Jio added nearly 32,000 towers during this fiscal. Bharti Airtel has 2.36 lakh 4G towers at present and Vodafone Idea has 1.6 lakh 4G towers.
This data means that Jio will continue to widen its competitive advantage even with the onset of 5G services. This is because, without significant fundraising by both Bharti Airtel and Vodafone Idea, Jio is better positioned on the 4G front, and is displaying a trend of increasing its capital expenditure significantly each year.