Vodafone to invest US$6 Billion in India

Vodafone has outlined ambitious plans to make its mark in India. The company took over Hutchison Essar, India's fourth largest mobile operator in a US$10.9 billion buy-out in May 2007. Vodafone said it is targeting 100 million customers within three years and plans to invest US$6 billion in its Indian operations. Vodafone Essar currently has a relatively modest customer base of 40 million subscribers.

In December 2007 Vodafone reportedly reached a network sharing agreement with two of its largest rivals in India. According to local press reports at the time, the deal should enable the company to speed up its planned coverage of the subcontinent while saving it a significant amount in costs.

Vodafone and Bharti Airtel, India's largest mobile service provider, will team up with their smaller competitor Idea, to form a joint venture that will pool network resources and may even seek a listing of its own on the Indian stock exchange in the future. The three mobile operators will share almost 70,000 mobile mast sites that have been put into the joint venture company, although they will retain separate wireless transmission equipment on these towers.

The new unit, to be called Indus Towers Ltd, will fund its expansion through debt and may sell shares to the public two years later. Bharti and Vodafone will each take a 42% stake in the new venture with Idea taking the remaining 16%. The trio will merge their infrastructure assets in 16 of India's 22 designated telecommunication zones.

According to figures from UK telecoms watchdog, Ofcom, released in December 2007, India added more mobile users in 2006 than there were in the whole of the UK at that time. The market in the subcontinent for mobile phones doubled in 2007 to over 150 million customers, an increase of over 70 million customers, which is more than the entire UK mobile market. Despite this tremendous growth in user numbers, mobile penetration in the subcontinent remains relatively low at 14%.