Having acquired the majority stake in Hutchison-Essar, Vodafone, the world’s largest mobile company, is set to challenge the No. 1 position of Bharti Airtel in India. On a brief visit to Delhi, Vodafone chief executive Arun Sarin, in an exclusive interview with Arun Kumar, says the telecom sector in the country is bound to witness consolidation in which not more than five players will survive.
You have spent $11.7 billion on acquiring Hutch-Essar. Was it worth it? What are your expectations from the Indian market?
Vodafone is very bullish on the Indian market as it is one of the fastest-growing mobile markets in the world. We are going to bring global synergy to the telecom circles by introducing a host of value-added services. We shall also increase our presence across the country. Vodafone has committed itself to investing another $2 billion in the Indian market in the near future. We want to become dominant players in India.
By dominant, do you mean the Number One player? By when do you hope to achieve this?
Yes. The target is to become Number One by 2010. We will offer more to existing customers, as well as increase our market share.
Will you be phasing out the Hutch brand?
Hutch is no doubt a premium brand built over a period. But eventually it will be replaced by Vodafone. We will do it in phases. Vodafone is a global brand and there are immense benefits for our customers if all our services across the world are brought under a single brand. The change should be complete by 2010.
You said in phases. Can you reveal a little more?
Initially there will be co-branding. The new name may be Vodafone-Hutch or Hutch-Vodafone. This will be done as soon as the acquisition process is completed and we have all the regulatory approvals. Subsequently, it will be a single brand -- Vodafone.
You have acquired majority stake, but Essar still owns 33 per cent. There are media reports that Essar may prove a stumbling block in the path of your acquisition. The Ruias are known for hard bargaining. Are you prepared to pay them a premium on the transaction value?
Essar has welcomed the entry of Vodafone. We have invited them to continue as our local partners. If they decide to exit, our other Indian partners in Hutchison-Essar will between them increase their holding to 26 per cent. (Existing government regulations do not permit a foreign company to hold more than 74 per cent stake in any telecom venture in India.) As far as premium on the transaction value is concerned, the answer at this point is no comment. We are going to meet the Ruias (on Thursday) and thrash out all these issues.
You have said the Indian telecom sector will witness further consolidation. How many players will eventually survive?
The consolidation will happen. It is a global trend and it will be followed in India. I feel that there will be space for just five players -- three in the GSM segment and one in CDMA. The last will be a grey area. (Global System for Mobile Communication or GSM and Code Division Multiple Access or CDMA are the two main competing network systems in mobile telephony.)