Bharti targets new users to fend off Vodafone

Bharti Airtel plans to sign up as many as 90 million users in three years to fend off a challenge from Vodafone Group.

Bharti will invest $8 billion in marketing, relay towers and network equipment to garner 25 per cent of the market, President Manoj Kohli, said in an interview in New Delhi yesterday.

Bharti now has 22 per cent, or 35 million users. Kohli was today named to take over as chief executive officer on April 1.

Vodafone, the world's biggest wireless carrier, may stand in the way of that target. The Newbury, England-based company aims to take on Bharti in the world's fastest-growing mobile-phone market in three years after buying a $11.1 billion controlling stake in Hutchison Essar.

"Bharti needs to move faster to add more value-added services to its portfolio to retain leadership. It would also help in reducing the impact of the fall in voice tariffs," said Deven Choksey, chief executive at K R Choksey Shares & Securities.

Subscribers are set to surge by the end of the decade.

"The market is moving toward 400 to 500 million customers,'' said Kohli, president of India's third-most valuable company, with a capitalisation of $31.6 billion. "We will have more than a quarter of that market by 2010."

Vodafone will need to match Bharti's users before being able to offer competition.

"Their network gives Bharti an edge over Vodafone and they must create more infrastructure to make services more affordable," Choksey said.

"Vodafone will first need to catch up with Bharti's monthly subscriber additions and for that it needs to invest in infrastructure, which Bharti already has in place."

The company will also seek acquisitions to expand.

"We are certainly interested in expanding our footprint Internationally," Kohli said. "Our geography of interest initially is of course South Asia."

Vodafone Chief Executive Arun Sarin plans to invest $2 billion in two years and raise its presence in rural areas to ensure the company's lead in the $12.8 billion market.

Shares of New Delhi-based Bharti have risen 16-fold in the five years since the company sold shares at Rs 45 apiece. In that time, Chairman Sunil Mittal has shrugged off challenges from Li Ka-shing's Hutchison Telecommunications International, Anil Ambani's Reliance Communications and Kumar Managalam Birla's Idea Cellular.

Singapore Telecommunications controls about 30.5 per cent of Bharti.

Vodafone owns another 10 per cent, a stake bought in October 2005.

Vodafone has agreed to sell 5.6 per cent of its holding to Bharti.

Soon after Sarin announced Vodafone's intention to acquire Hutchison Essar last month, he offered Bharti an agreement to share networks and relay towers that run national long-distance and international long distance services in India to cut costs.