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Thomas K. Thomas

Plans launch of low-cost handsets in India by year-end

New Delhi May 30 Vodafone has initiated the process for changing the name of the recently-acquired Hutchison Essar to the proposed name Vodafone Essar with the Registrar of Companies.

The company is also in the process of finalising its branding and changing its board composition, according to sources close to the development. The entire process is expected to be completed by middle of June when Mr Arun Sarin, CEO, Vodafone Plc, is scheduled to arrive in India to unveil the company's strategy.

While Vodafone's entry will create more competition in the Indian cellular segment, the company is also planning to take on the might of existing handset manufacturers like Nokia and Sony Ericsson.

As part of its global strategy, the company is planning to launch its low-cost branded handsets in India by the year-end. Chinese handset manufacturer is the Original Design Manufacturer (ODM) for Vodafone handsets priced between $25 and $40. "There is a need to look beyond existing suppliers, to include new entrants such as ODMs as an option to retain flexibility, challenge the established players and exploit differentiation opportunities for Vodafone," said a Vodafone source

Customised handsets

Vodafone sources said that the customised handsets also enable the company to drive up its average revenue per user. "The exclusive handsets will be fully designed to meet the needs of Vodafone's customers in terms of price, specification and user experience. ODMs provide the opportunity to fully integrate Vodafone's live services and, therefore, help drive use of services and increase ARPU," said a Vodafone source.

Vodafone is also looking to adopt similar strategy to bring down cost of 3G handsets. "ODMs challenge existing manufacturer brands in terms of price level, thus Vodafone is benefiting from lower terminal purchase costs and reduced subsidy levels. The ODM strategy is complementary, providing Vodafone with additional opportunities, for example using the pricing benefits to introduce 3G entry level phones at a high specification, which is something that is currently more difficult for the existing vendors to achieve," said Vodafone sources.

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