Vodafone Idea share price rose on Friday after the company announced a robust capital expenditure plan of Rs 50,000-55,000 crore over the next three years, aimed at bolstering its 4G and 5G network capacity and coverage.

In an investor presentation, the company said that it had already spent over Rs 2,000 crore on capital expenditure in the first half of FY25, resulting in a 14 percent increase in its 4G data capacity. The 4G population coverage also grew significantly, adding 22 million new users during the period.

For the second half of FY25, Vodafone Idea plans to ramp up its spending, with an estimated Rs 8,000 crore earmarked for network expansion and service improvement.

The telecom operator also hinted at the possibility of further tariff hikes, stressing that an uptick in prices is essential to ensure reasonable returns and support future investments. “Prices need further adjustment to generate reasonable returns,” Vodafone Idea stated in the presentation.

Before the recent tariff hike in July 2024, the last tariff hike was taken in Nov 2021.

"Tariffs in India are lower than other comparable markets in the world. Further given inflation, prices need to catch up. Significant headroom in ARPU as usage has increased multi-fold but ARPU have not increased in line with usage," it added.

The ambitious capex plan has renewed investor confidence in the company’s ability to remain competitive in the telecom space, despite its financial challenges. On the NSE, Vodafone Idea’s shares gained 2.42 percent to quote at Rs 8.05 per share at 1 PM.

Earlier in October, Vodafone Idea's promoter Kumar Mangalam Birla had said fundraise helped the company kickstart the capex cycle.

He highlighted that Vi's follow-on-public offer (FPO) was the largest of its kind in India. "We had received bids worth more than Rs 90,000 crore... the response was an emphatic endorsement of the potential of Indian telecom sector," Birla said.

The fundraise, Birla said, enabled the company to kick start its capex cycle. Vodafone Idea has already announced the first phase of capex deals worth $3.6 billion with three global partners- Nokia, Ericsson and Samsung, Birla said.