Mumbai: Vodafone Essar, India’s third-largest mobile carrier, will launch third-generation (3G) services in the country in the January-March quarter of 2011 and plans to spend up to $500 million within two years on its 3G networks, its managing director said on Thursday.
Marten Pieters told reporters that the company would price the services competitively and that he was “optimistic” about revenue from 3G services, which would facilitate features such as faster Internet on mobile phones and video calling.
Vodafone Essar, controlled by Vodafone, won 3G radio airwaves in nine of India’s 22 telecoms zones in an auction that ended in May. Last week, the company named Nokia Siemens Networks and Ericsson as its 3G equipment suppliers.
Vodafone Essar paid about $2.6 billion in the auction that saw much higher-than-expected bids, with no single firm winning spectrum in all the zones.
Vodafone Essar is in discussions with other “quality” operators to forge alliances for delivering 3G services beyond the nine zones where it has its own spectrum, Pieters said.
“I said all quality operators. Bharti and Idea are quality operators,” said Pieters said, when asked whether the company was talking to rivals Bharti Airtel and Idea Cellular for 3G alliances.
India is a late adapter of 3G and is the biggest economy to not have these premium services in large scale yet, though the state-run telecoms firms have 3G services in some telecom zones.
With 3G services, carriers’ margins are expected to improve as data services offer higher margin than voice services. But the premium services may take time to pick up in a price-sensitive market like India.
“We are starting from a low level. It will take some time before we get real volume,” Pieters said.
Vodafone Essar has about 116 million 2G customers in India, trailing Bharti Airtel and Reliance Communications.
Vodafone owns 67% of Vodafone Essar, with India’s Essar Group holding the remainder. Essar Group has an option to sell its entire stake to Vodafone for $5 billion by May 2011.