Where will Vodafone invest Rs 18,605 crore in 2 years?

British telecom giant Vodafone will invest Rs 18,605 crore ($3 billion) in India over the next two years says group chief executive Vittorio Colao.

The investment will be used for expanding rural coverage, expanding 3G coverage, Ipfication of the network and transmission network. The proposed investment is about 15 percent of the Group’s global investment and excludes cost of spectrum for both 2G and 3G.

Vodafone’s Project Spring has an investment of around £7 billion by March 2016 where the the focus is on data, enterprise and emerging markets. In case of India, the focus will be on 3G voice and data coverage. India being a priority market for Vodafone, the company is focusing on data in a big way.

According to COAI, Vodafone is India’s number two operator in terms of rural subscribers. The total rural base stands at 274.32 million and Vodafone has around 84 million rural subscribers. The company has agressive plan to increase its reach in rural India as majority of urban India has reached three digit mobile penetration. Growth is flat in urban India whereas in rural India it is still growing.

Rural Subscribers in India
Operator   Rural subscribers
                     (in mn)
Airtel           87
Vodafone    84
Idea              70
Aircel           23
Uninor        10

Source: COAI

From a 12 circle 3G operations, Vodafone India is planning to increase its services pan India. All this will incur huge investment in terms of network expansion. The company also plans to focus on IPfication of the network as it will help the company to transform from a voice centric network to a data centric network. Focus would be on transmission network as well as IT network as the shift is happening towards creating a data-centric network.

Vodafone is also looking at India listing in FY 2014-15 once the Rs 11,200 crore tax laibility on its 2007 acquisition of Hong Kong-based Hutchison Whampoa’s stake in India’s telco Hutchison Essar.dispute is settled. The company is also planning to increase its stake in the Indian arm from present 64.38 percent to 100 percent and plans to invest additional Rs 10,000 crore.

Vodafone India’s announcement is a good sign for Indian telecom as it is an investment time for all the operators. The operators who invest now will be the winner in the data play in couple of years.


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