Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.
Mobile giant now has more than 200 million subscribers, but says it won't overpay for India's Hutchison Essar to add to its base
January 31, 2007
Vodafone Group plc (NYSE: VOD) announced today that it has more than 200 million subscribers but says it won't pay over the odds to add Hutchison Essar 's 23 million-plus customers to that tally. (See Vodafone Issues KPIs.)
Vodafone is one of several companies interested in acquiring a controlling interest in Indian GSM operator Essar, which had 23.3 million subscribers at the end of 2006. (See Essar Offers $11B for Hutch Buyout, Vodafone Sparks Bidding War Over Hutch, and India Mobile Subs Soar in 2006.)
Various parties, including Reliance Communications Ltd. (RCom) , have expressed an interest in the 67 percent stake in Essar currently owned by Hutchison Telecommunications International Ltd. (NYSE: HTX), with bids as high as $11 billion already reported.
But as he presented his company's latest key performance indicators (KPIs) to investors, CEO Arun Sarin said due diligence on Essar was still ongoing and that "we will be disciplined on price." He promised "more clarity in the coming weeks."
Investors have expressed concern that Vodafone might pay too much for India's fourth largest mobile operator, where, despite the evident growth opportunities -- only 142 million of the country's total population of 1.1 billion are mobile subscribers -- the average revenue per user (ARPU) is low compared with other markets, and the margins are wafer thin.
Vodafone regards emerging markets such as India as key to future growth because of their enormous potential. (See Vodafone Unveils Convergence Plans, Vodafone Sells Swiss Stake, Vodafone Cashes In on Japan, Belgacom Buys Proximus Stake, and Vodafone Buys Telsim Assets.)
The carrier also regards fixed/mobile convergence services as important to attracting and retaining customers and has launched a number of mobile-WiFi handoff services that route cellular calls over customers' broadband connections when they're at home. Sarin said Vodafone Germany now has 2 million customers signed up to that service, called Zuhause (At Home).
Vodafone has branched into fixed broadband services and is now offering DSL connectivity, as well as 3G mobile broadband, in five markets, including Germany, the U.K., and Italy, promising several more in the coming months. (See Vodafone Unveils DSL Offer and Vodafone, FastWeb Team Up.)
Sarin is also focused on cutting costs by outsourcing non-core tasks, consolidating Vodafone's data centers, and striking network sharing agreements with other carriers. Vodafone has already announced a deal with Orange SA (London/Paris: OGE) in Spain to share the rollout of 3G infrastructure in less densely populated areas, saying other opportunities are being "considered on a country by country basis." More network sharing deals are set to be announced in the coming months, added the CEO. (See IBM, EDS Share Vodafone Spoils, Vodafone Talks M&A, Mobile Adverts, and V'fone Consolidates Data Centers.)
Sarin's pledge not to buy at any price, and the company's latest KPIs, edged Vodafone's share price up by 2 pence (or "tuppence"), more than 1 percent, to £1.49 (US$2.91) on the London Stock Exchange .
In a research note issued this morning, Lehman Brothers analyst Christian Kern noted that Vodafone's "strong KPIs" had beaten its estimates. He added that investors had been nervous following Deutsche Telekom AG (NYSE: DT)'s profit warning earlier this week, "but Vodafone has done well and is likely to be positively received today." (See DT Issues Profit Warning.)
— Ray Le Maistre, International News Editor, Light Reading
You May Also Like
Rethinking AIOPs — It's All About the DataMar 12, 2024
SCTE® LiveLearning for Professionals Webinar™ Series: Fiddling with Fixed WirelessMar 21, 2024
SCTE® LiveLearning for Professionals Webinar™ Series: Cable and 5G: The Odd Couple?Apr 18, 2024
SCTE® LiveLearning for Professionals Webinar™ Series: Delivering the DAA DifferenceMay 16, 2024