With the approval of FIPB and Finance Ministry, the transaction between Hutchison and Vodafone (world’s biggest telecom operator) has been closed. The company will soon be renamed ‘Vodafone Essar’ and the services would be marketed under the Vodafone brand. For Vodafone, India would be its third largest customer base after Germany and US, and possibly having most potential for expansion, as India has only 13% teledensity, while in other countries where Vodafone operates currently are reaching saturation point.
Vodafone has also declared its intention of penetrating the Indian market by announcing to invest $2billion in first year of operations, introducing low-cost handsets to make mobile telephony affordable and infrastructure sharing with Bharti which will include sharing towers, shelter, civil works and back-haul transmission. This sharing would results in savings of around $1 billion over the next five years and accelerate rural coverage. Its decision to pare its stake to less than 10% in Bharti Airtel, is in line with its strategy of exiting markets where it did not command a leadership position.
