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Vodafone looks to avoid leading 5G 'arms race'

Vodafone Group PLC does not intend to lead in 5G, saying an industry arms race to invest in network infrastructure upgrades would create unhealthy market dynamics for operators.

Instead, the company will aim to roll out 5G network in-line with the leading incumbents in each of markets over the next two years, Vodafone's recently announced CEO, Nick Read, said during a Nov. 13 earnings call.

While the company will aim to build "largest 5G network," starting with key urban areas where it says 66% of its sites are "5G ready," it would prefer to "co-lead" on the pace of its rollout, according to Read, who is the group's former CFO. He added that this scenario would be preferable to an "arms race," which would put pressure on CapEx.

"We don't want to go faster or slower than the fastest player in the marketplace… we're not going to push them into an arms race. I don't think it's healthy for the industry," Read said.

This year, Vodafone purchased €2.4 billion-worth of 300MHz of spectrum across 700MHz, 3700MHz, and 26GHz bands in Italy. In the U.K., Vodafone spent €434.11 million on 50 MHz of 3.4 GHz spectrum. Over the next 18 months, the group said it faces further 5G spectrum auctions in Germany, the U.K., Spain and South Africa, along with Turkey and Egypt in the following year.

Group revenue on an IFRS 15 basis was down 5.5% to €21.80 billion for the six months ending Sept. 30, with operating losses of €2.07 billion. Losses for the financial period amount to €7.83 billion.

Group service revenue on an IAS 18 basis declined 4.3% to €19.71 billion, against a 4.2% fall in adjusted EBITDA to €7.08 billion for the half-year period. The S&P Global Market Intelligence consensus EPS estimate for the quarter was 3 cents on a GAAP basis.

Vodafone said its revenue reflects foreign exchange headwinds, the impact of the adoption of IFRS 15 and the sale of a stake in the Qatar unit, while impairments of €3.5 billion in Spain, Romania and India contributed to losses.

Net debt grew to €32.11 billion, compared to €30.19 billion on an IAS 18 basis for the prior-year period.