The Hindu Business Line : Will valuation go up for other telcos?

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Chennai Feb. 13 The Vodafone deal is going to bring out intense competition between a global-best telecom giant against India's best, says Mr Romal V. Shetty, Director (Telecommunications), KPMG. "Vodafone would aim to be number 1 quickly," he reasons.

Mr Shetty, who is a qualified chartered accountant and a certified information systems auditor, has over ten years of extensive risk consulting and revenue assurance experience in the field of telecom consulting. He has been involved in managing revenue assurance engagements that have resulted in identification of revenue leakages and potential opportunities to maximise revenues for a significant number of telecom organisations in India and abroad.

But Vodafone had a stake in an Indian company earlier. How is the current deal different? "Though Singtel and Vodafone had stake in Bharti, they never were operationally involved in the day-to-day running," explains Mr Shetty. "Now it would be operational battle between the various telcos." Telcos, for starters, means telecom companies.

Okay, will valuation go up for other telcos? Yes, but not necessarily in the same proportion as Hutch, opines Mr Shetty. "The reason hutch attracted such a high valuation was due to the fact that it has one of the highest ARPUs in the country and is a very well run and managed company." ARPU stands for average revenue per user, a key metric for assessing the efficiency in the telecom industry. "In mobile telephony, ARPU includes not only the revenues billed to the customer each month for usage, but also the revenue generated from incoming calls, payable within the regulatory interconnection regime," elaborates Wikipedia.

Competition

What does the competition mean for the consumers? They will benefit, because they would be introduced to new products and service offerings including what is being offered in European markets, foresees Mr Shetty. "3G service is the next `explosive' growth phase for Indian telecom companies and Vodafone would be perfectly placed to use its expertise and take the market lead."

The latest press release on www.vodafone.com, dated February 12, is about `worldwide mobile financial remittance venture' between Vodafone and Citigroup. "Mobile-based international money transfer service targeting the global remittance market worldwide," says the communiqué. "The new service will provide senders and receivers of money with a superior method for sending money home that is convenient, cost-effective, secure, transparent, and easy to use."

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