Facing increased competition with the entry of 4G newcomer Reliance Jio and a massive spectrum auction next month, Vodafone plans to inject as much as $3 billion in equity into its Indian operations, the Economic Times reported.

The newspaper quoted an inside source as saying: “Overseas market conditions make it favourable to replace the debt here with equity as the return on equity is higher here and it will cut the debt servicing costs”.

Vodafone India’s net debt for fiscal 2015-16 was about INR815 billion ($12.2 billion).

London-based Vodafone noted that there has been no change in its IPO timetable, which reportedly is scheduled for Q4 but rumours persist that could be delayed. The company said in June it was working on the prospectus for the IPO and was likely to file it in August, but last month said it would delay the filing until the end of the year to wait for Jio to officially launch its rival 4G service.

Vodafone India, the country’s second largest operator with a 19 per cent market share, is expected to bid aggressively for 3G and 4G airwaves in next month’s auction, with its spending forecast to go as high as $2 billion. The operator only has 4G spectrum in nine of the country’s 22 service regions.

India’s largest ever spectrum auction starts on 1 October, with more than 2,350MHz of spectrum in seven 3G and 4G bands going on sale. The auction is forecast to raise a record INR5.6 trillion ($83 billion), far exceeding the country’s last auction, which raised INR1.1 trillion in March 2015. But in recent weeks experts have attempted to dampen forecasts, because of the high base prices set.

Adding to Vodafone’s need for funding is Jio’s aggressive move in the market, with offers of free voice and LTE data until the end of the year. Jio’s entry is likely to start a price war, with major rivals – Airtel, Vodafone and Idea Cellular – reportedly set to respond with packages that beef up their own data offerings.