Business Standard
Vodafone has big plans lined up for rural India Leslie D'Monte / Barcelona February 14, 2007
The £29,350 billion Vodafone, the largest company in terms of revenue in the mobile space, is planning to move in a big way in rural areas of emerging markets such as India.
The company is set to introduce low-cost handsets besides new services such as information, entertainment, mobile payments and money transfers — areas that it has worked upon and strengthened in Europe and other markets.
"We are no longer a mobile company anymore. We are now a total communications company," asserted Arun Sarin, CEO, Vodafone, in his first exposure to the media at the 3GSM World Congress 2007, after announcing his plans to acquire a 67 per cent stake in Hutchison Essar for $11.1 billion.
Incidentally, he did mention on the sidelines, that he wanted Asim Ghosh to retain his position in the company.
"India presents a fabulous opportunity," said Sarin, adding that the penetration of mobiles in the country was only about 13 per cent (teledensity is around 17 per cent), but was growing at a very rapid pace. He noted that while India boasted of 400 minutes of use per subscriber per month, Europe speaks of 150 minutes and the US of 800 minutes.
Meanwhile, in a separate development, Union Minister for Communications and Information Technology, Dayanidhi Maran, said: "This (Hutch-Essar acquisition) speaks volumes of the right policies of the Indian government."
Vodafone recently reached the 200-million subscriber mark. With India's 25 million, Sarin expressed optimism that the company would soon touch the 300-million number. "We're excited about moving into rural areas. People still love to talk," said Sarin.
Vodafone, of late, has been changing its strategy. In emerging markets (such as Turkey and South Africa), the focus has been on growth.
The company believes that emerging markets are approximately 60 per cent of the total expected growth in the next five years. The CAGR is 12.3 per cent as compared with 4.4 per cent in developed markets.
Thanks to the Telsim acquisition in Turkey, Vodafone now has a 24.6 per cent market share there as of March 2006. In Egypt, it has 17 per cent penetration.
In South Africa, it has increased its stake to 49.9 per cent. And in India, with Hutch Essar's 25 million, it's surge into emerging markets has got further momentum.
Vodafone is gung-ho on the mobile growth for the simple fact that while there are 1.4 billion TV sets globally and 1 billion personal computers, there are over 2 billion mobile phone users. However, "we need to look at new revenue streams", reasoned Sarin. Vodafone has been doing that for some while.
The company has already been exploring the mobile advertising and social networking spaces, besides the mobile payments (including money transfers) and mobile TV.
Vodafone already has partnerships towards these ends with the likes of YouTube (videos), MySpace (social networking), Google (search), Yahoo (Instant messaging) and eBay to name a few.
Sarin, however, cautioned that "we need to define common standards. We need to define the size of banner advertisements and video advertisements besides reporting platforms to make mobile advertising a success".
Vodafone At Home and Vodafone At Office have been great success stories of the company to address fixed-line revenue. Sarin said that fixed-mobile convergence would also be one of his top priorities.
-- My humanity is in feeling we are all voices of the same poverty. - Jorge Louis Borges