Vodafone India, the nation’s second-biggest telecom firm, will continue to invest a minimum of Rs. 4,000 crore to Rs. 6,000 crore every year to expand operations in the world’s second-biggest mobile phone market, its chief executive has said.
The company, which has invested Rs. 55,000 crore since coming to India in 2007, plans to invest in networks after it gets new spectrum and its licences are extended.
“We see every year investment level of around anything between Rs. 4,000 and 6,000 crore that we have done in last (few) years. On top of that Rs. 11,500 crore is what we paid for 3G spectrum. You can expect that (this) level at least will be sustained,” Vodafone India’s MD and CEO Marten Pieters told PTI in an interview in New Delhi.
He said that the company has invested total of about Rs. 55,000 crore in its telecom networks in period of last six years and paid government an equivalent amount in terms of licence fee, taxes and for buying spectrum.
UK-based Vodafone has around 154 million subscribers in India, and broadly 18 per cent of the Indian mobile market as per August data. It is country’s second-biggest telecom company in terms of user base.
Mr. Pieters, however, said that the investments will depend on spectrum and licence extension, where a lot of clarity needs to come.
“But again I need spectrum for that (investments) because even if I want to I don’t know where to invest. Once I get spectrum, you would see us investing at that level,” he said.
Vodafone India’s licences are due to expire in three metros — Delhi, Mumbai and Kolkata. The spectrum held by Vodafone in three metros, Bharti Airtel in two metros and Loop Mobile in Mumbai would be put for auction, which is expected to start in January, 2014.
As per government announcements, the company will have to bid for spectrum in the auction, initially being conducted for three metros, to continue its business in these service areas.
Asked about Telecom Minister Kapil Sibal’s recent statement about Vodafone Group Plc having told him about plans to invest more than $2 billion in the country, he said that spending referred to the UK parent’s plan to raise stake in the Indian unit to 100 per cent.
This follows the government’s decision in August to remove the sectoral cap on foreign firms investing in telecom firms. Vodafone directly and indirectly owns a combined 84.5 per cent of Vodafone India.
Earlier, foreign firms were restricted from holding no more than 74 per cent of telecom firms in direct ownership.
“100 per cent FDI was welcomed by Vodafone because we think that we need more growth opportunity in the future financially. Actually Indian ownership was a restriction which means if you want to strengthen your balance sheet by bringing in equity, also your Indian partner needs to bring in equity which is of course tough. Vodafone will use that opportunity to go to 100 per cent,” Mr. Pieters said.
On the status of Vodafone group’s application before Foreign Investment Permission Board (FIPB), he said: “I know only as much as you know.”
India is fifth largest contributor to Vodafone Plc’s revenues and fourth in terms of profits.
“We are absolutely number 1 when it comes to customers. Since, the customer don’t give us so much money in India, the revenue is about number 5, operational profitability we are number 4 now,” he said.
Mr. Pieters said Vodafone is also working out plans to invest in India under Project Spring where its plans to invest about USD 9 billion in next three financial years across the globe in its 4G, 3G and other telecom networks.
“We are planning for that (Project Spring) of course in India also but again it is very much depending on can we get spectrum to spend that money,” he said.
