Vodafone strategy to enter India

Vodafone, the world’s largest mobile phone operator by revenue, has unveiled an India focused, high-growth strategy for the next five years that will include bringing ultra-low-cost handsets and wireless connectivity in the vast hinterland and “being a good corporate citizen” now that it has acquired its greatly-fancied 67 per cent stake in Hutchison Essar, India’s fourth-largest mobile operator.

Vodafone’s spectacular high-stakes entry into the Indian market, which gave Hutch an enterprise value of $18.8 billion, is expected to provide a much-needed boost to slowing the company’s top-line growth and launching India as a likely new battleground for foreign communications companies.

It is India’s single largest investment from overseas. Vodafone’s India-born CEO, denied any other possibility of other foreign brands to enter the Indian market any time soon.

The Vodafone management triumphantly said it fully expected “to be the only international brand in India” and would reap the rewards of that.

Vodafone’s third largest ever and the largest foreign direct investment in India, gave the British giant crucial access to the “largest high-growth market in the world where it is possible to acquire (74-per-cent) control”. It represented the natural fallout of the bald fact that “India has been on the path of reform for 18 years”.

India is a very fast-growing market Vodafone expects returns in India to be about 14 per cent a year.

Even as news of the deal spread, Chairman of the doughty Mobile Data Association has declared that more phones were connected in India in 2006, than the population of the UK. It is time to acknowledge, address and learn from the Asian influence.

The CEO of Vodafone said building infrastructure was their top priority in a country with little mobile coverage. Vodafone was working on a $25 handset planning to offer Vodafone Live services, along with mobile banking and broadband.

Vodafone wants a 20 to 25 per cent market share in India by 2012, which it will target by expanding its distribution and network coverage and through a “customer focused” approach.