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Vodafone to take on competition with Rs 13,000-cr investment

business Updated: Nov 14, 2015 01:04 IST

A man speaks on his mobile phone as he walks past logos of Vodafone painted on a roadside wall in Kolkata. REUTERS

Vodafone’s latest move to invest £1.3 billion (Rs 13,000 crore) in India may lay the ground for future merger and acquisitions (M&As) and the UK-based company’s listing on the bourses, analysts said. It will also help the company to build the infrastructure required to take on Mukesh Ambani’s Reliance Jio and address other issues, including over-the-top operators (OTT) like WhatsApp, Viber and others, as well as net neutrality, they added.

On Thursday, Vodafone announced a fresh investment of Rs 13,000 crore (£ 1.3 billion) in India to fuel capacity additions and new business initiatives.

“It (Vodafone India) has fortified itself with this investment from challenges from players like Reliance Jio,” said Mahesh Uppal, telecom consultant and founder of ComFirst.

Reliance Jio is expected to launch 4G services by mid next year.

Vodafone has already invested over Rs 111,000 crore in India.

“It will help Vodafone to take on challenges from new players as well as acquire customers. With payments bank licence to add, it will be a powerful player,” said Romal Shetty, telecom head, KPMG.

The investment will also help Vodafone, which has a good presence in enterprise business globally, to focus on the same in India. “Enterprise is a big business for them globally, and the company would like it to replicate in India with additional investment or acquisition of small enterprise players,” said a senior analyst with one of the firm advising Vodafone in India.

Announcing its half-yearly earnings early this week Vodafone India said its service revenue grew 11.2% to Rs 22,902 crore from Rs 20,601 crore last year. The company has made sustained capital investments of Rs 3,627 crore in the first half of the current fiscal year, driven by significant investments in new site roll outs to deliver superior customer experience and growth in key focus areas.

“With such investments any operator can make issues like net neutrality and OTT irrelevant,” said NK Goyal, telecom analyst with CMIE.