The gloves are starting to come off as the world No. 1 gets ready to battle the Indian No.1 for top-dog status in the fastest growing cellular market.
A day after a major triumph that saw it bag a majority stake in Hutchison Essar, the country’s fourth-biggest mobile company, Vodafone Group, reiterated its desire to quickly gain market share. That move, which is in keeping with Vodafone’s philosophy of being either No. 1 or No. 2 in the markets it operates in, will put the company in direct competition with Bharti Airtel, which is the country’s top-ranked mobile phone firm in terms of subscribers.
Arun Sarin, Vodafone’s chief executive officer, told reporters in Barcelona that he aimed to take his company to the top of the Indian cellular market. Sarin was responding to Sunil Mittal, chairman and managing director of Bharti Airtel, who earlier welcomed “Sarin as a competitor from a partner to India”. Mittal wished that “from the current fourth(place) held by Hutch, he would push it to be a strong No. 2.”
Vodafone, which held a 10% stake in Bharti prior to its Hutchison win, has agreed to sell 5.6% back to the Mittals, the promoters of Bharti, for $1.6 billion (Rs7,040 crore). Both companies had also signed a network sharing deal as part of this new, evolving relationship. Vodafone, the world’s biggest cellular operator by revenues, will make a major splash, spending up to $2 billion (Rs8,200 crore) in expanding the Hutch network in India, rolling out mobile payments as well as its multimedia offering Vodafone Live. It also plans to boost wireless broadband services, industry sources said.
Meanwhile, Bharti Airtel and Reliance Communications, the top two Indian cellular firms, have already said they will invest $2.5 billion each to expand their networks in fiscal 2008. Hutchison Essar, which on its own is spending $1.2 billion in network expansion through March, expects new-found energy—and deeper pockets—after the Vodafone takeover.
“For growth, the question is whether you have the capex (capital expansion) to spend or not,” Asim Ghosh, chief executive of Hutchison Essar said in a telephone conversation with Mint.