Vodafone Essar will spend $400 million to $500 million on its third-generation services electronic equipment before they are launched in the first quarter of 2011, Marten Pieters, chief executive officer said. The company will fund it through bank loans and by issuing some new shares to its existing shareholders, Vodafone Group and Essar Group, Mr Pieters said on the sidelines of a company demonstration of the 3G services it will be launching.
In May, Vodafone Essar — India’s third-largest telecom operator by subscribers — paid Rs 11,618 crore for spectrum, or radio frequency, in nine services areas. The company paid such a high price because of an artificial scarcity of bandwidth, Mr Pieters said. Vodafone’s services will be launched in a phased manner. Beginning from metro areas Delhi and Mumbai, 3G services will be rolled out in all circles including Chennai, Kolkata, Maharashtra, Gujarat, Tamil Nadu, Haryana, Uttar Pradesh (East) and West Bengal, Sanjoy Mukerji, director (business operations) of Vodafone Essar said.
Mr Pieters said Vodafone is in talks with quality and long-term operators — including Bharti Airtel and Idea Cellular — to offer 3G services in areas where it does not have 3G airwaves. The end objective of these tie-ups will be to allow customers to seamlessly experience 3G across the country, irrespective of whether it is a Vodafone circle or another operator, Sunil Sood, the company’s other director of business operations said.
Mr Mukerji said 3G services would be competitively priced, adding that every bouquet of services would be priced differently according to use and location. For example, video calling may be priced higher in a remote location than in cities with adequate mobile access.
In an interview with ET, Vodafone Group’s chief executive Vittorio Colao had said: “I don’t think 3G services here will imply all you can use plans — these are being withdrawn from European and US markets. In India, the amount of frequencies are less and it is not compatible with such plans. Data will be segmented and the plans will be tailor-made for different segments of the population.”
Vodafone is likely to be one of the later private players to launch these services. Tata DoCoMo is expected to announce that it will begin offering its high-speed services from the first week of November. State-run telecoms are already providing 3G services in select circles.
In a highly-competitive Indian telecom market, 3G services are being considered the next revenue generator after regular value- added services. Consumers may take time to adopt data services that would be priced much higher than existing voice tariffs, which have recently seen radical reduction. “These (3G) services should push up average revenue per user,” said Mr Mukerji without detailing the potential increase. Vodafone expects 10% of 2G network users in India to switch or upgrade to 3G in a year, depending on the proliferation of 3G enabled handsets, he said.
In India, data users make up less than 10% of the company’s existing consumer base and are expected to increase as 3G usage will be an upgrade from voice calls and not in its place. Only 2% of Vodafone’s global 3G consumer base uses video calling, a trend that may find only lower numbers in India.
Last week, Vodafone Essar gave a three-year contract, estimated to be $500 million, to Ericsson and Nokia Siemens Networks to roll out 3G network. Vodafone owns 67% in Vodafone Essar. India’s Essar Group holds the rest and has an option sell its entire stake to Vodafone for $5 billion by May 2011.
(source - ET)
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