Vodafone Ramps up Network, Distribution in India

Vodafone India is hoping its expansion of network and retail facilities will help it to fend off its mobile rivals. The operator has recently published data revealing how much it spent in several circles on infrastructure improvements. So far, these investments appear to be paying off. Vodafone's market share rose from 18.1% in February 2014 to 18.9% in February this year, according to data from the Telecom Regulatory Authority of India.

Unsurprisingly, the biggest of the investments Vodafone India has revealed came in the mega city of Mumbai, where Vodafone spent around $158.9 million in 2014. Besides adding 1,200 new 2G and 3G sites to its Mumbai network, the operator also opened seven new stores and a further 27 "mini" stores.

Table 1: Vodafone Investments in Specific Circles

Circles Investment (in $M) Number of sites added Number of retail outlets added
Mumbai 158.9 1,200 7 Vodafone stores and 27 mini stores
Bihar and Jharkhand 39.7 1,250 3 Vodafone stores and 19 mini stores
Rajasthan 31.7 9 Vodafone stores and 50 mini stores
Andhra Pradesh and Telengana 23.8 1,300 12 Vodafone stores and 100 mini stores
Uttar Pradesh (East) 75.9 800 (3G sites only) 11 global design stores
Source: Vodafone

The Mumbai moves are clearly aimed at strengthening Vodafone's business before rivals begin offering 4G services in metropolitan areas. The risk is that 4G competitors will try to poach Vodafone's higher-spending customers. Vodafone's market share in Mumbai rose from 24.2% at in February 2014 to 27.6% last February, according to TRAI's data, although it is likely to have benefited from Loop Telecom Pvt. Ltd. 's closure of its Mumbai operation earlier this year.

Vodafone's disclosures indicate that it is also keen to improve coverage in rural parts of India. Indeed, all of the other circles (service areas) on which it has shared investment information are primarily rural in nature. Operators have traditionally been reluctant to expand in these areas because of concern about a low return on their investments, but they have started to realize the next phase of subscriber growth will happen in these communities. Competitors including Idea Cellular Ltd. and Uninor are also now making investments in India's hinterland.

Vodafone's data reveals that it built another 1,300 sites in the Andhra Pradesh and Telengana circle last year. It also increased its retail presence in the region by opening 12 Vodafone stores and 100 of its mini stores. Those moves helped the operator to grow its market share from 9.3% in February 2014 to 9.7% last February, according to TRAI. Vodafone also recorded a significant gain in Uttar Pradesh (East), where it spent $75.9 million in 2014, growing its market share from 19% in February 2014 to 21% in February 2015.

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Vodafone also claims to be the only service provider to be setting up a physical presence in towns of just 500 or so people. Its "Laal Dukaan" (loosely translated as Red Shop) facilities are designed not only to sell products but also to educate new subscribers about mobile phone services.

Vodafone's rural spending plans form part of Vodafone Group plc (NYSE: VOD)'s Project Spring investment program. Last year it added a total of 11,000 2G and 15,000 3G sites throughout India to improve the service it offers to its customers. It also now claims to have 9,800 outlets across the country.

Even so, retail expansion has recently been a focus for all of India's operators. Bharti Airtel Ltd. (Mumbai: BHARTIARTL), the biggest player, has more than 150 company-owned and company-operated outlets and plans to open additional facilities. It also has 1.4 million distribution outlets in the country. Idea Cellular, which is hot on the heels of Vodafone as India's third-biggest mobile player, operates 1.5 million retail outlets. Vodafone will need to stay on its toes.

— Gagandeep Kaur, contributing editor, special to Light Reading

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thebulk 4/29/2015 | 12:06:29 PM
Re: No 4G? @Ariella, thats funny and quick thinking on their part. but from a security perspective I would never alow my card to be copied like that. 

Ariella 4/29/2015 | 8:26:54 AM
Re: No 4G? LOL @theBulk That reminds me of an incident a year or two back. A local supermarket's intenret/phone connection went down. Rather than turn away credit card customers, (which would have cost them quite a bit of business) they dug out those old machines and forms.
thebulk 4/29/2015 | 1:27:10 AM
Re: No 4G? Maybe in a few years they will begin to accept credit cards, and they will use one of those slide contraptions with the carbon duplicat paper. 
Ariella 4/28/2015 | 4:35:13 PM
Re: No 4G? @theBulk I was completely flabbergasted that they would request that. I can't even remember when was the last time before this that I purchased a money order. I would guess it was in the last century!
thebulk 4/28/2015 | 2:56:49 PM
Re: No 4G? @Ariella, ok, I didnt see that coming, not at all. Wow! I didn't even know money orders were still a thing. I don't expet to be able to pay with bitcoin or anything, but they should at least take credit cards or some othe form of transfer. 
Ariella 4/28/2015 | 8:23:15 AM
Re: No 4G? @thebulk what blows my mind is seeing organizations still use 20th Century steps even when they are on the internet. For example, the City University of New York that allows online applicatons still depends a great deal on paper and requires that the fee for registration be paid in the form of a money order! Never mind that they won't take electronic payments online or credit card payments, they don't even allow checks! Money orders are generally for people who don't keep bank accounts, and who expects them today in an age of electronic and mobile payments?
thebulk 4/28/2015 | 4:49:24 AM
Re: No 4G? @Ariella, I have never understood when companies build roadmaps with outdated technology, it just blows my mind. 
Ariella 4/27/2015 | 12:10:47 PM
Re: No 4G? @Bulk good point. It's wasteful to set up something you know will be obsolete in a very short period of time.
thebulk 4/27/2015 | 12:43:08 AM
Re: No 4G? So far out, I would think 5G would be more than viable by then, so why waste time and money with a step to 4G just wait it out and push 5G 
Gagandeep Kaur 4/27/2015 | 12:41:07 AM
Re: No 4G? Well thats debateable. telcos with 4G spectrum (Reliance Jio, Tikona) havent launched services in spite of the fact that they got spectrum in 2010. Airtel is the only one which has launched in a few circles but the response is hardly encouraging. I suspect Vodafone is maximising its returns from 3G before moving to 4G. Idea Cellular also plans to launch 4G services on 1800 Mhz but only in 2017. 
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