However, given the rate at which HEL’s subscriber base is growing it won’t be long before the Indian operations overtake these two countries to emerge as Vodafone’s top market. HEL is adding over a million new users to its base every month. Vodafone will now have a 22.1% marketshare of the 110 million-plus GSM space in India. More importantly, this corroborates with Vodafone’s strategy of being in the top three mobile operators wherever it operates. HEL is India’s fourth largest cellular operator and third largest GSM operator and is only 38,000 subscribers short of overtaking BSNL, the second largest GSM player. At present, the UK-based company has ownership interests in 27 countries across 5 continents. In addition, the group has partner networks in a further 33 countries. Germany is the largest market for Vodafone with 30.6 million subscribers (as of December 31, 2006) while US (where it has 44.4% stake in Verizon) is the second largest with 26.2 million users. Following the HEL deal, India has become the country with most potential for expansion for Vodafone with only 15% teledensity. Most countries where Vodafone operates currently are reaching saturation. Switzerland has 96% teledensity followed by Germany (80%), US (76%), France (78%), Turkey (67%) and Romania (70%). This acquisition is also important for Vodafone, considering that the 3G rollout in India is slated for early 2008. Having spent over $27 billion in buying 3G lincences in countries, and 40% of its capex over the last couple of years towards 3G roll-outs and networks, Vodafone is far ahead of all its rivals in this space. Vodafone is therefore sitting on a goldmine as its customers across the globe migrate to high-revenue 3G services like mobile TV, video and audio downloads. Hutch, which commands the highest ARPUs (average revenue per user) in India and also has the highest mix of corporate and high-end users, is best poised to tap the immense 3G potential that India offers. The potential subscriber base, combined with Vodafone’s expertise in this segment, may prove to be the answers to Vodafone’s woes in the developed markets. While ARPU figures for the last quarter are yet to be released, HEL was the only player in the GSM space to record an increase in its ARPUs in the previous quarter. Additionally, HEL also registered the highest growth in overall revenues amongst all GSM players during this period. This comes at a time when the average industry ARPU has witnessed a 3.21% decline as all other GSM players, including market leader Bharti Airtel, have registered a fall in their ARPUS. It must also be noted that Vodafone Group Plc’s acquisition of HEL, and in the process, sell-out its 10% stake in Bharti Airtel, is in line with its global exit strategy. Vodaone’s recent history reveals that the telecom behemoth has exited markets where it did not command a leadership position, and has shed stake in operators where all doors to pick up controlling stake remained closed. Consider this: In November 2006, Vodafone sold 25% in Swisscom (£1.8 billion) in Switzerland, a market with 96% saturation. In August 2006, Vodafone sold 25% stake in Belgium’s Proximus for Euro 2 billion. Earlier, in March 2006, citing “reduced prospects for superior long-term returns,” the company sold off its Japanese unit to Softbank for about $15.5 billion. Similarly, in October 2005, Vodafone sold its 100% interest in its Swedish unit to Telenor, the pan-Nordic telecommunications operator for $1.2 billion. At the same time, the company, in December 2006, strengthened its position in Egypt, where it increased its stake in Vodafone Egypt from 50.1% to 55% for an estimated £108m.
SOURCE : TMI INFOTECH
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