We are growing our topline and increasing our market-share amidst everything that is going on. In the first half this year we grew 17-18 per cent. This is largely due to initiatives across the board — both within the organisation and outside of it. SUNIL SOOD, CHIEF OPERATING OFFICER, VODAFONE INDIA
Despite retrospective tax and spectrum-related issues, Vodafone, which had about 152 million subscribers at the end of September, grew its revenue 13.3 per cent and operating profit margin to 28.4 per cent for the first half of 2012-13. Vodafone India’s capital expenditure was lower at Rs 1,700 crore in April-September, against Rs 2,430 crore in the same period in 2011, given the economic slowdown and uncertain regulatory outlook.
The company is betting on financial inclusion, which, in conjunction with its rural push and data services in the urban areas, will be a key growth driver. Sunil Sood, Chief Operating Officer, Vodafone India spoke to Business Line on how the company faced challenges in rural penetration and on its growth initiatives.
Excerpts from the interview:
In the midst of the licences issue and the tax imbroglio, what is happening?
We are growing our topline and increasing our market share amidst everything that is going on. In the first half this year we have grown around 17-18 per cent. This has come about largely due to our initiatives across the board — both within the organisation and outside of it.
First, we are making a huge thrust into rural India. While the urban subscriber base for voice has plateaued out, rural India holds a lot of potential. Having said that, we are looking at a rural customer with lot more practicality compared to our competitors.
Just because he is a rural customer does not mean that you can sell something outside of his interest area. Rural budgets are limited, they have different ways of consumption and, more important, they seek trust when it comes to day-to-day things such as top-ups, faulty SIM cards and recharges. For example, one of the common complaints we have heard is with regard to some of our competitors who did not physically go to the hinterland.
So, we set up laal dukaan (red shops), and we make sure the person running it has a good connect with the people — for example, someone from the local Panchayat. This, we figured, would drive growth in the rural areas. Also, there were issues regarding the territory these distributors were operating from. So, we used satellite maps, super-imposed them over the census data and allocated sites. This initiative, coupled with the usual hub-and-spoke model, has paid dividends. As of September, we had 73 million rural subscribers.
You launched 3G in January 2011 but subscriber additions have still not been attractive.
If you look at the numbers, in 2011 3.5 per cent of our gross subscriber revenues came from data services. This year, that has gone up to 5 per cent. Interestingly, Karnataka contributes 7 per cent of data revenues. We have 2.1 million 3G customers and data as a percentage of revenues is 21 per cent of our overall customer base in India.
Isn’t selling data different from opening up small outlets that can top up and recharge?
Yes, selling data is very different. For that we had to train 70,000 people and we had to do that quickly. Only 30 per cent of our frontline sales people knew what kilobyte or megabyte meant. Also, we have installed a data specialist in the call centre whose key result area is to get a customer’s services configured the moment he walks in and handhold them through all issues.
What is happening to your m-pesa initiative? Others have already rolled out such initiatives?
Our partnership with ICICI Bank for m-pesa (a financial inclusion initiative) will be launched in Kolkata, West Bengal, Bihar and Jharkhand and then to other parts of the country in phases. After successfully piloting it, we are in the advanced stages of rolling out this initiative. The basic thing we are looking to address is the fact that a farmer who has three crop cycles, and to whom banks do not always reach out, has to safeguard his money. If you look at our rural initiatives and tie it to our overall strategy, we can leapfrog others in this area. Can it be the next big thing for us? We believe so.