 "Too early for 4G in India: Vodafone")
“It’s too early for 4G in India. The market is not ready and it will take some time to get the ecosystem ready,” Marten Pieters, managing director and chief executive officer of the global major’s Indian arm told Business Standard today.
Vodafone India is the country’s second largest mobile operator by subscriber base.
Pieters also said the company was “unlikely” to opt for an Initial Public Offer (IPO) of shares this year. He said they’d wait for “clarity” on the regulations regarding spectrum pricing and licences before deciding on an IPO.
He also said an operator needed spectrum in both the upper and lower ends for better service. “Like we have spectrum in both the 900 MHz and 1,800 MHz bands for 2G (second-generation services), we would like to have the ecosystem ready with spectrum in the upper band and lower band with us before we plan to roll out 4G, as and when the market is ready,” Pieters said, declining to give any time frame for this.
“Spectrum is too expensive here in India. For 4G, an operator needs at least 5 MHz of spectrum, which we don’t have,” he added.
In India, Bharti Airtel has already begun offering 4G services in select cities. The Mukesh Ambani-backed Reliance Jio Infocomm, which has spectrum for all 22 telecom circles in the country, is planning 4G services from December this year.
Asked if Vodafone would bid at the proposed auction of the 700 MHz spectrum for 4G services, Pieters said, “There is no clarity on when the auction will take place. They (the government) said this last year and the year before, too.”
Many future decisions will depend on the clarity on spectrum pricing, he said. “We need to know the formula. In 2014, a lot of our licences will be coming up for renewal,” he explained. At present the company has about Rs 30,000 crore of debt in India. “If the renewal prices are too high, our debt will go up substantially,” he said.
Vodafone India today reported a 10.6 per cent rise in service revenue to Rs 35,610 crore during the year ended March 31. The MD said the India operations now contribute more than 10 per cent to the multinational company’s global revenues. “Profitability is a concern in India. The cost of operations is very high here,” he added.
He said there’d been a “reasonably healthy level” of capital expenditure this year. “The future area of growth in India is in data,” he went on, indicating much of future investment would be data-driven. “We will invest more if the regulators allow us to,” he said.
On the Rs 11,200 crore tax liability case, the company said, “Vodafone International Holdings BV (VIHBV) is discussing with the Indian government whether a mechanism exists under Indian law which would allow the parties to explore the possibility of a negotiated resolution of this dispute but there is no certainty that such a mechanism exists or that a resolution acceptable to both VIHBV and the Indian government could be reached.”
On whether the company planned to raise base rates soon, Pieters said: “There is no such plan yet. But the discount schemes have been reduced.”
Data revenue during the year grew 50.5 per cent to Rs 2,000 crore, and operating free cash flow increased 58 per cent to Rs 6,300 crore during the year ended March 31. Ebitda margins rose 3.4 percentage points to 29.7 per cent during the year. Total Ebitda stood at Rs 10,641 crore.
Vodafone India has only 3.3 million 3G subscribers, of the total data user base of 37.3 million.