Aggressive Vodafone sets the mobile pace

Aggressive Vodafone sets the mobile pace

Mumbai: Vodafone Group Plc.’s Indian operation, Vodafone Essar Ltd (until recently Hutchison Essar Ltd), has, in the four months ended August, signed on more customers in the 16 licensed areas in which it operates than its bigger rival and India’s largest mobile telephony firm, Bharti Airtel Ltd.

Bharti Airtel, which runs operations in 22 Indian telecom circles, on Monday announced that its customer base at the end of September had crossed 50 million, including some three million fixed-line phone subscribers. Latest figures for Vodafone Essar, which unveiled the Vodafone brand in India last month, will be available in a week’s time. Last available figures put Vodafone Essar’s subscribers (all mobile) at 34.11 million at the end of August.

Hutchison Essar, until March, was India’s fourth largest mobile phone services firm.

Vodafone Essar is now the third largest (only Bharti and Reliance Communications Ltd are ahead of it), and nearly five months after the Newbury, UK-based Vodafone Group bought a controlling two-thirds stake in Hutchison Essar mid-March and renamed it Vodafone Essar, the Indian operations are clearly setting the pace for Bharti Airtel and other large phone firms such as state-owned Bharat Sanchar Nigam Ltd.

Vodafone acquired the controlling stake in the company at a time when Hong Kong-based Hutchison Telecom International Ltd, the earlier parent of the Indian mobile phone firm, was spending just about enough on network expansion and having to put up with friction with local partner, the Mumbai-based Essar Group.

Hutchison Essar was lagging far behind Bharti Airtel in terms of net addition of subscribers in the 16 common circles, with the market leader adding around 300,000 and 380,000 customers more in January and February, respectively.

Vodafone, which is the world’s largest mobile phone services company, announced its intent to acquire a 67% stake in the Indian firm owned by Hutchison Telecom in a $11.1 billion deal on 11 February. By 15 March, it had won over the support of Essar, which holds 33% stake in Vodafone Essar.

The acquisition won regulatory approval in early May, by when the Arun Sarin-led Vodafone was clearly in charge. That month Vodafone added just more than 1.5 million subscribers, about 108,650 more than what Bharti Airtel added in the same 16 licensed areas (or circles) in which Vodafone Essar operates. Vodafone Essar is awaiting licences in other circles.

Vodafone has committed $2 billion in network expansion this financial year, nearly double the amount spent in fiscal 2007. “Hutch has not been the first mover; it has been a follower," said a Mumbai-based telecom analyst, who did not wish to be identified. “Vodafone has brought more aggression compared to Hutch."

Since May, Vodafone Essar has added more subscribers than Bharti Airtel in the common circles every month. The New Delhi-headquartered Bharti Airtel has been able to bring down the difference to 28,112 in August; Vodafone Essar added 1.68 million customers in August.

“(The) global expertise of Vodafone in managing telecom business has started reflecting in terms of subscriber growth post acquisition," said Sumit Modi, an analyst with Emkay Share and Stock Brokers Ltd. “The (Indian unit) was lacking management focus before the acquisition by Vodafone."

Vodafone Essar managing director Asim Ghosh declined comment.

“We should look at long-term trends in the telecom market to asses realities," said Sanjay Gupta, chief marketing officer, mobile services, Bharti Airtel.

India, the fastest growing mobile phone market in the world by customers with about eight million additions a month, has around 200 million wireless phone subscribers; as a percentage of the country’s population, that is less than one-fifth.

“Given the supply driven nature of the market and aggressive coverage expansion plans of operators, we believe that (the) peak in net additions is yet to come," Citigroup Global Markets Inc. analysts Rahul Singh, Gaurav Malhotra and Anand Ramachandran wrote in a recent research note.