Vodafone enters India

India-born Arun Sarin has ensured that Vodafone is in India. Almost two months after Hong Kong-based Hutchison Telecommunications decided to get out of its Indian operations--Hutch Essar--the deal is done at an enterprise valuation of $ 18.8 billion.
So has Voda paid too much for an entry into India? Well, it ends up paying $ 11.1 billion for a 67% stake in the venture. It will also get $ 1.62 billion from the sale of its 5.6% stake in India's biggest mobile operator Bharti Tele-Ventures. That's a neat $ 9.46 billion. But, that fits into Voda's EMAPA strategy. After all it has got out of Japan and Sweden in the past year and a half.
But, what could be end up being an issue later for Vodafone is that the Essar group has decided to remain in the venture. That's fine for now. Issues are likely to crop up once the big expansion plans are rolled out. Will Essar be in a position to fund it on a continuous basis remains to be seen.
The big thing to look out for over the next 12 months will be the battle for leadership. Can Vodafone overtake Bharti? That remains to be seen. But for now, it is a good time to be a mobile subscriber in India.
One advantage that is being touted is that Vodafone has acquired a company that has the highest ARPUs in India at Rs 374 ($ 8.3). But, as of now, it does not have a presence in the C circles (states). Once Vodafone enters these circles, see ARPUs coming down to the national average. That's because ARPUs in these circles are way below the national average of Rs 335.
One must remember that Vodafone should have learnt in the last 18 months how Bharti works. That could be leveraged to compete effectively against it. But Bharti is itself no pushover. The battle lines are drawn for the biggest battle ever in Indian mobile telephony.