Vodafone believes 2G, 3G and 4G will co-exist in India for years to come and believes multiple networks can help address the needs of all strata of customers and is cost efficient. Management highlighted past failure of a 3G-only network. Vodafone is increasing its own 3G network footprint from nine circles to 16, reducing the dependence on roaming, which will help improve quality and lower costs. Vodafone is also working aggressively to launch LTE in five key markets that account for 40-50% of its data revenue by March 2016. [We think this is a bit laid-back approach compared to the massive mobile data deployment of Reliance Jio involving TD-LTE, FD-LTE, Small Cells and WiFi]
India has become the largest market by data volume for Vodafone group globally, and the company sees continued strong growth. However, the company sees a unique challenge in India of educating customers about the benefits of the internet. Management sees increasing advertising spending by e-commerce players, rising adoption of social networking and resultant peer pressure as some of the potential data adoption drivers among incremental customers.
Vodafone has not seen any meaningful impact of VoIP but is hoping for a level playing field with VoIP providers.
Industry voice revenue growth has been stable, excluding the IUC rate cut. Currently, about 3% of its customers own LTE devices.
Vodafone said it is looking to invest INR85b in FY16, at a similar level to FY15 when it increased its capex significantly. Vodafone highlighted that capex efficiency is improving with investment in single RAN equipment. Vodafone is redeploying its legacy 2G equipment in new sites or for enhancing capacity of its existing sites.
According to management, the Indian telecom industry is seeing natural consolidation with 85-100% of incremental revenue captured by the top 3 operators and smaller operators facing funding issues, unable to invest in data networks, unable to retain spectrum and losing market share despite lower pricing