‘100 million, thanks to you’, says the coffee mug strategically placed on the desk of Marten Pieters, managing director and CEO of Vodafone Essar. Pieters says he is in a mood to celebrate, as the company has just reached the 100-million customer mark after 14 years of operations in India. In this interview with Katya Naidu, the MD points out that the industry is not too much about customers but the revenue from them. He further adds Vodafone is going to achieve the next magic number (200 million) sooner than anybody thinks. Edited excerpts:
Aren’t you late in achieving the 100-million customer mark, considering that two of your competitors have already achieved that?
The reality is that our industry is not too much about customers but the revenue we get from them. Last quarter, our revenue market share was 21 per cent. That makes us the second-largest player in the country. We have 100 million customers and they are also good customers because they give us good revenue.
Bharti and Reliance Communications have already started talking about 200 million customers. What’s your target date?
We are going to achieve the next magic number sooner than you might think. Last month, we added 3.6 million new customers, an all-time high. We see scope for a lot of growth.
But India is primarily a voice market. Do you see the data market growing at the same space?
India is lagging in data for many reasons. It was a late starter and there is also not enough spectrum and, so, we use spectrum meant for voice for data. With new spectrum being released, we should see a difference. We already see internet penetration increasing in India although, in absolute numbers, it is still at six per cent, which does not sound like much. But, six percent of 1.2 billion is a big number, making for an interesting market.
The slice of population using data services will increase. Today, we have six per cent of our revenues coming from data and we expect that to double in the next five years.
3G auctions will start on Friday (today). The telecom market has seen irrational pricing before. Are you worried that something like that may happen in the 3G bids as well?
It is very tough to predict what will happen in auctions that have many participants. But, there is a scarcity of spectrum in India. In the last 12 months, the government has not handed any new spectrum. But, we added 30 million customers in the last one year, and these people are using capacity. So, you can imagine what can happen when you grow from 70 million to 100 million customers and you get no new spectrum. There is a need for spectrum not just for 3G but also 2G. There might be interest in this spectrum because of spectrum scarcity and there will be buyers for any new spectrum coming to the market.
In that case, does it make sense to bid for 3G aggressively?
Consider this: In Europe, they have 500,000 customers for 1 MHz of spectrum. In India, there are 12 million customers for 1 MHz. That is 240 times higher. Quality for the customer is relatively poor. There is huge value in getting more spectrum and it can achieved in many ways, like buying an operator with existing spectrum, if that is allowed. It also can be through auctions, like for 3G. Development in this market has been held back because of scarcity of spectrum.
Vodafone was upset over dual technology players having an edge over GSM players. Have your concerns on 3G been addressed?
We have been saying consistently that we want an equal playing field for all the players in the market. We see a huge difference in the way different operators are being charged, be it for licence fees or others. We will keep fighting for the same reasons.
I have been reading that BSNL might have a new rule for paying for 3G, even though they got 3G earlier. Actually, that itself is not an equal playing field. All the players should get it at the same time. You should at least pay for it when others pay for it. Now you have this discussion on how they should pay. We are not afraid of competition, but it is very difficult to play a boxing game with one hand bound behind the back. Isn't it?
What has been the feedback from the government in this matter?
This is a complicated discussion because there are many interests involved. Vodafone Essar contributed Rs 6,700 crore to the government last year, if you add taxes, licence fees and spectrum fees. There is a popular joke here that, last year, we worked until December 15 for the government and the last two weeks for the shareholders. This is the comparison if you consider the kind of money shareholders made. Actually, shareholders did not get a dime of cash, as it is being re-invested into the network. The government also wants us to roll out in the rural areas and we shall do that.
Do you see mobile banking growing fast in the next few years?
Mobile banking has been difficult so far because of regulation. As an industry, we have been asking for a liberal approach because we think we can contribute considerably towards what the prime minister calls “inclusive growth”. The industry has millions of outlets that can easily be used for electronic banking services. We have seen that there has been hesitation because it is an unknown area, and also banks have been reluctant.
If the unique identification (UID) project is up and running, it is good news for mobile operators. We already do a lot of verification on customers and it is a very cumbersome process. If we can swap that for an electronic process by using the UID system that Nandan Nilekani is trying to put up, that would help the system for more mobile payment-operated services.
You have launched ultra low-cost mobile handsets abroad at $15-20 (Rs 660-890). When will you launch them in India?
We will launch them in a couple of weeks. It has been our experience that the price of the handset is a threshold for many first-time buyers. Besides, people in India do not like to be locked to an operator. In the US and Europe, the handset will work only on the Vodafone network. But, we will not do that in India.
