Vodafone’s entry triggers fresh competition and rings in happier times for customers

Other global players, for one, cannot be expected to just sit back and watch. Not when the £30 billion (Rs 2,60,000 crore) Vodafone paid $11.1 billion (Rs 50,000 crore) in addition to assuming a debt of $2 billion (Rs 9,000 crore) for a 67 per cent controlling stake in Hutch Essar. Seems a trifle expensive, considering Sunil Mittal spent about Rs 30,000 crore to build India's largest mobile empire, but Vodafone expects the country to become its largest market within 12 months on the back of the scorching run rate of 6.5 million net adds per month. Vodafone's chief executive Arun Sarin explains that the premium paid is justified because Hutch Essar's revenues account for 23 per cent of the total Indian pie, though it holds only 16 per cent of the market share of pan-India users.

PICTURE SPEAK
YOUR TIME STARTS NOW: Vodafone, which has a global subscriber base of 200 million, gets a slice of the world's fastest-growing telecom market. The challenge will be to get a bigger bang for the buck. It will pursue practices like network-sharing to ramp up subscription to get to the top spot. Arun Sarin aims to grab one-fourth of the market and has lined up investments of over $2 billion in India in the immediate future.	CALLER TUNE: Other global telecom majors will find it hard to ignore India now. Competition from Vodafone will force local players to slash tariffs and improve customer services. Expect handsets at throw-away prices and attractive price plans.

Expressing confidence in both the favourable policy and the macro-economic conditions, the top brass roared while on a whirlwind trip of India: there couldn't be a better time for the world leader to storm the country. In the words of Vodafone Chairman Sir John Bond, "India is destined to become one of the largest and most important mobile markets in the world." That will surely ensure that India takes centrestage in every global mobile company board room. Top American players AT&T and Verizon, Japan's Nippon Telegraph and Telephone, China Telecom and China Mobile could be among the first to come calling.

The immediate future could bring more value for money and greater competition, with Vodafone lining up investments of $2 billion in India. It is targeting a market share of 20-25 per cent and 100 million subscribers in five years' time, up from the existing 24 million, and looking forward to meaningful liaisons with the Government on regulations. Others like Reliance, too, are ramping up investments.

PICTURE SPEAK
NUMERO UNO: Sunil Mittal has little to worry about now. He will buy back Vodafone's stake and use the pole position to aggressively add to his customer base.	WAIT AND WATCH Anil Ambani lost the chance to bag a big target in GSM, but he made Vodafone pay more. He will wait for new targets as he builds scale.	WIN-WIN: Ruia brothers Shashi and Ravi are best placed. If they stay in the business they reap benefits of growth. If they cash out, they get $6.6 billion.

India is the most competitive market-no other country has seven mobile operators-with the lowest tariffs. And to woo it, Sarin has promised to bring in "all the glory of Vodafone as it were". High-end subscribers will be spoilt with world-class branding, super customer care, competitive price plans, entertainment options and innovations like mobile banking. Vodafone could also leverage its global network to slash international roaming charges.

Not much is to be expected immediately on 3G services, which Vodafone is certain India isn't ready for yet. True to its name, which stands for voice data phone, its main focus will be a fast roll-out of 2G in rural areas by introducing handsets priced at Rs 1,000 or less.

The potential spoilers in the deal, though, cannot be underestimated. While speculation is rife on what the Ruias will do, Sarin has invited Essar to stay on. "We'll like them to stay so that we can build this company," he says. But Vodafone is open to getting another Indian partner as per policy requirements if Essar does exit with its 33 per cent stake. The competition has begun ringing in new strategies within minutes of Vodafone dialling into India with its battle cry, "We are going to be the leader here". Bharti has dropped roaming charges while others mull new initiatives. The players may feel the heat, but for the consumer, it is a cool time to be mobile. As the Vodafone tag line says, make the most of now.

INTERVIEW | ARUN SARIN

"Our job is to make life difficult for competition" Vodafone's chief executive spoke to INDIA TODAY on the future prospects of the company in India. Excerpts. On the importance of the business in India: Hutch's subscriber base of 23 million is growing at a million net additions every month. In a year's time, it will become bigger than the largest Vodafone company, which has about 30 million customers. We hope to grow to 100 million in five years. India will help boost our earnings from emerging markets. On Vodafone's plans in India: We are delighted to be here and to be part of this great story. It is in our DNA to be a responsible company. We will work hard to cover the rural parts and are committed to the government's tele-density targets of 500 million by 2010. On competition: We are building our business here. Other players can pursue their own strategies. Our job is to make life difficult for competition. On the future of the deal: We expect to close the Hutch deal by April. I am personally very interested in Essar staying on. However, if it decides to reduce its stake, we could get another Indian partner. It's too early yet and we are keeping all options open. We are here for a very long time and we are surely not walking out.

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