Vodafone plans global application R&D centre in India

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Mr Marten Pieters
Mr Marten Pieters

Thomas K Thomas

New Delhi, Oct. 27

The UK-based mobile operator Vodafone is looking to set up a global applications research and development centre in India in a bid to leverage on software skills in the country.

Speaking to Business Line, Mr Marten Pieters, Managing Director, Vodafone Essar, said, “We are already in the process of setting up an application centre in India. India is such a big centre for IT, technology and application development so we will leverage this not only for our Indian operations, but also for the rest of the world going forward.” Mr Pieters, however, did not reveal any other details on Vodafone's plans.

Data services

On the future of data services in India, Mr Pieters said that Vodafone will drive data usage aggressively as the voice market hits saturation levels.

“There is also a latent demand for data given that there is only one per cent data penetration. So there is a huge opportunity to develop new revenue streams,” he said.

On the state of the overall Indian telecom economy, he said there are a lot of concerns among the investors as the rate of return on investment is slowing down.

“Shareholder and banks don't give funds till they are sure they will get returns. Returns in the last six quarters have remained still. Subscriber numbers have grown but revenue has not grown. Everybody is expected to invest more but returns are not there. A few years ago there was lot of interest in India but now there are people thinking about how to exit this market than to enter. Vodafone is a long-term player but the total picture needs to be attractive for investors and the Government has a big role to play to make the market more attractive,” he said.

When asked if the subscriber growth numbers being reported by operators were beefed up, Mr Pieters said the new operators were playing an aggressive game on acquisition to show big numbers, but the proof of the pudding would be to see whether these customers are still on their network six months later.

He also said that merger and acquisition rules and spectrum management norms needs to be tweaked to enable big players to acquire smaller ones if there is an opportunity.

“There is no market with 12 operators. This is a ridiculous number. If we have to be in the consolidation game then firstly we need a clear spectrum policy. For us getting spectrum is indeed attractive but I don't know what the rules are. We see reports that we have to pay more fees or give back spectrum; so why would we acquire another operator if it adds to our spectrum cost. Also there is need to change M&A rules which enable bigger guys to acquire rather than having a situation where a number 10 player acquire and a number 11 operator. Two unsustainable operators together may still be unsustainable,” he said.

Mr Pieters said that mobile number portability will be good for Vodafone as it will enable subscribers to move to a good quality service provider.

(This article was published in the Business Line print edition dated October 28, 2010)
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