The Indian subsidiary of British mobile giant Vodafone has doubled its capital spending to two billion dollars as it seeks to ramp up network coverage in the world's fastest-growing cellular market.
The capital expenditure rise follows Vodafone Plc's purchase in March of a majority stake in Hutchison Essar from Hong Kong-based Hutchison Telecommunications International for 11.1 billion dollars. "Since our entry into India, our capital expenditure has doubled. We are now spending two billion dollars a year," Vodafone chief executive Arun Sarin said on a visit to the Indian capital where he met Finance Minister P. Chidambaram.
Last month, Vodafone, the world's leading cellular operator, began using its own name across India, rolling out what it called one of the globe's biggest rebranding operations in the country of 1.1 billion people. Vodafone is adding 1.6 to 1.7 million customers a month in the Indian cellular market, which in August grew by more than eight million subscribers to 201 million, making it the fastest expanding in the world.
"Before we came to India, the company was adding 800,000 customers (a month)," Sarin told reporters. The purchase of the Indian unit is seen as crucial to Vodafone's profits growth as it contends with saturated cellular markets in the developed world. India's teledensity - the number of people owning a telephone out of every 100 people - stands at just 21 percent.
Sarin said Vodafone may share its cellular tower facilities with rivals so that network coverage can be rolled out faster. "We are looking at ways to piggyback on each other's infrastructure to reach out to the masses quickly." Vodafone was talking to leading Indian mobile provider Bharti Airtel about sharing infrastructure but no final agreement had been reached, he said.
Vodafone is seeking to extend its coverage to 90 per cent of the market from 50 per cent. It has said it wants to make its Indian unit the number one mobile provider in India by 2010. The Indian unit has already moved up to third from fourth place since being acquired in March.
Sarin, whose company is contesting a two-billion-dollar tax bill stemming from the Hutch purchase, said the matter did not come up in talks with the finance minister. "There was no discussion about the notice from the income tax department. The matter is in court and we will wait for the decision of the court."
The ministry argues Vodafone should have deducted tax at source before making its purchase payment to Hutchison and given the money to the government. A company official said Sarin's call on the finance minister was a "goodwill" visit. Sarin also met telecom minister A. Raja to discuss Vodafone's plans to expand operations. Vodafone has said its focus will be on India's rural markets.