What next for Vodafone's India strategy?

Thomas K Thomas Updated - March 12, 2018 at 12:49 PM.

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With the tax case out of the way, Vodafone can now focus its attention fully on the Indian market, including a possible Initial Public Offering.

The British telecom company's intentions were made clear by CEO Mr Vittorio Colao who said that Vodafone will now invest more in the Indian business.

“We will continue to grow our Indian business - including making significant investments in rural areas and in 3G network coverage - for the benefit of Indian consumers,” Mr Colao said just after the verdict by the Supreme Court.

‘India, a key market'

Analysts said that the SC ruling removes a distraction for Vodafone, “India is a key market for Vodafone and now it can really focus all its energies on the market,” said Mr Romil Shetty, Director of Telecom Practice, KPMG. “The positive verdict will enable Vodafone to move better. Emerging markets will contribute a vast majority to Vodafone's global revenues and India is the key,” said Mr Mohammad Chowdhury, Partner, Telecoms Industry Leader at PricewaterhouseCoopers India.

Vodafone currently has 146 subscribers in the country, a huge number compared to its other markets.

For the fiscal 2010-11, the Indian operations generated revenues of $3.86 billion and an operating profit of $15 million.

Boost for investments

The SC ruling also has positive impact for the entire telecom sector as it provides clarity on foreign acquisitions, which will complement the proposed liberalisation of M&A in the Indian telecoms industry.

“Greater clarity on the tax consequences of their investments will make it easier for foreign investors to participate in this process,” said a Fitch report .

More battles

“Indian telecom sector needs a lot of fresh investments so the SC verdict is good news as it restores investor confidence in our regulatory system,” said Mr Kunal Bajaj, Partner & Director India, Analysys Mason.

But market watchers believe that this is only the first step and there are more battles to be fought.

For example, there is still no clarity on 2G spectrum pricing which could result in pay out of a few thousand crores for all the incumbent mobile companies including Vodafone. Then there is also the fight with the Department of Telecom on the issue of 3G roaming.

>tkt@thehindu.co.in

Published on January 20, 2012 16:52