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Vodafone - 3 : Stellar Performance

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Voice&Data Bureau
New Update

Vodafone Essar has continued its robust growth in India. Its telecom services
revenue has gone up by 14% to Rs 23,200 crore in fiscal 2009-10 from Rs 20,400
crore in Fy 2008-09. The strong growth is despite being in a highly competitive
market with 14 operators.

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Wireless subcribers number crossed the 100 mn mark in Q4 FY 2009-10, with a
total churn of 38.8% in Q4 FY 2009-10.

Mobile services revenue growth was driven by the increase in the customer
base with record net additions of 9.5 mn for the fourth quarter, partially
offset by the ongoing competitive pressure on mobile voice pricing.

Customer penetration in the Indian mobile market reached an estimated 50% as
on March 31, 2010, representing an increase of 16.0% as compared to March 31,
2009. EBITDA grew by 9.2%, driven by the increased customer base and the 37.6%
increase in the total mobile minute usage during the year with costs decreasing
as a percentage of service revenue despite the pressure on pricing.

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India's service revenue increased by 13.7%. It is primarily driven by a 46.7%
increase in the mobile customer base offset in part by a decline in mobile voice
pricing.

Vodafone - 3

Highlights
  • Spent £0.8 bn on capex last year as compared with £1.4 bn a year ago
  • Mobile user churn—26% postpaid, and 40% prepaid
  • To increase investments in new business areas like enterprise and
    carrier business

 

Network expansion also continued with the addition of 9,000 base stations by
Indus Towers and an additional 16,000 by Vodafone Essar, making Indus Towers the
world's largest tower company with over 1,00,000 towers under management. The
awarding of six new national licenses, just a year after its entry into the
market, also helped the operator's performance.

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However, the cherry on the cake for Vodafone this year was its managing to
secure 3G spectrum in nine circles-comprising 60% of the operator's subscriber
base-for Rs 11,617 crore.

Vodafone also had plans for leveraging BWA spectrum for better data services,
but failed to win any slots in the BWA auctions, exiting when the bidding price
became unaffordable. It is the first operator to announce its launch of the
Apple iPhone 4 in India in September this year. Vodafone in the UK had earlier
sold 50,000 iPhones in the first twenty-four hours itself.

In December 2009, the Vodafone Group acquired 49% interest in each of the two
companies that hold indirect equity interests in Vodafone Essar following the
partial exercise of options. As a result, the Group increased its aggregate
direct and indirect equity interest in Vodafone India from 51.58% to 57.59%.

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We continue to invest in equipment
and technology

CMO, Vodafone Essar, Kumar
Ramanathan

IPL, ZooZoo campaigns and cheaper
handsets.... please share some success strategies that helped you stay ahead
in the last year?

At Vodafone, we place customers at the heart of everything we do. Our
brand identity, 'Power to you' expresses our desire to offer better choices
and empower our customers with unique advantages. One of the key aspects of
our business approach this year has been to sharply segment our customer
offerings and deliver differentiated products and services to be relevant.
We employed high-end business analytics to identify homogenous customer
segments and then created a product and distribution strategy to meet the
requirement effectively. This approach has borne results and Vodafone has
increased its revenue market share this year. We recently launched ultra low
cost handsets priced at just about Rs 800 to increase accessibility of
mobile technology for millions of people who were so far unable to get
connected owing to the handset price barrier.

What are your expansion plans for the coming year?

Vodafone has increased its market share to consolidate its position in
India as the second largest operator in terms of revenue. We have also
crossed the landmark of 100 mn subscribers in the country. Over the past
three years, we have invested over Rs 20,000 crore to expand operations and
help serve our customers better in India. We rely on our global and Indian
experience to deliver the best products and services to our customers. With
a distribution reach of about 1.2 mn outlets, we are well geared to serve
customers in the remotest corners of India. In addition to voice and text,
Vodafone will also work on investing in products and services that drive
access to various data offerings. We will also continue to increase
investments in new business areas like enterprise and carrier business.

What were your customer centric strategies?

With 'mass customization' as our mantra, we introduced a bouquet of
products and services tailored specifically to suit the varied usage
patterns of our customers. Our tariff plans are developed based on a deep
understanding of our customers' needs, so that we can offer them better
choices and empower them with optimum value. For example, we introduced
campus packs for our young customers in colleges, and region specific plans
were designed to provide customers with unique benefits at economical rates,
free SMS offers, etc. The key is to be distinctive and unique, yet
unrelenting in 'delivering value' across the spectrum of customers. Hence,
there is no silver bullet that can be an answer.

Is competition driving down pricing ?

With too many players, the market has become hyper-competitive and is
driving down pricing to unsustainable levels. This is not in the long term
interest of the category. At the same time, a spectrum constrained scenario
means higher investment in infrastructure which will also have its impact on
consumer pricing. It is necessary to recognize and address these challenges.

There has been a lot of consumer complaints of late with regard to
call drops and fluctuating network coverage...

Network quality is a moving target and Vodafone continues to invest in
equipment and technology to provide optimal coverage in this spectrum
constrained scenario. We are happy that all our internal measures of
customer delight continue to rank us ahead of our competitors on customer
advocacy.

What are your new plans for 3G?

We are delighted to have secured 3G spectrum in nine high value circles
covering over 60% of our current customer base. We feel that we have already
secured a critical strategic footprint across the country, particularly in
the markets where we expect the main demand for 3G services in the next few
years. Our aim is to launch the services soon after spectrum is provided by
the government.

Vodafone has continued to grow with its multitude of offerings. Vodafone
Essar also launched its first mobile applications store in March this year,
which saw over 10,000 downloads in the first few days itself. In April, Vodafone
also launched unlimited GPRS browsing for its customers in Karnataka at Rs 95 a
month, and in the same month also signed a deal with Aegis Srinagar BPO to
handle its call traffic, offering hundreds of Kashmiris working in Delhi and NCR
a chance to return home. Besides this, the operator's ZooZoo IPL campaign
earlier this year was another winner, which proved a huge success in terms of
revenue for the operator.

Vodafone also donated $1 mn to the World Wide Web foundation-a non-profit
organization to enhance web education. The company also recently tied up with
BlackBerry and RIM to launch the E-UNO R10 healthcare solution on a Vodafone
services delivery platform for the prevention of heart attacks.

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The operator plans to return to low levels of organic revenue growth during
FY 2011, and the growth in India and Africa is expected to continue.

Vodafone Essar is known for quality value added services. The industry is
watching for Vodafone's 3G strategies. In 3G, it will be one of the leading
players.

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