Vodafone is offering 3G in India. Vodafone will buy Essar's 33% stake in the joint operation, Vodafone Essar , for $5 billion, or approximately Rs 22,200 crore. However, the valuation, decided four years ago when the UK operator acquired Hutchison's Indian operations, looks far too exorbitant compared with the valuations prevailing in the Indian telecom sector.
Indian telcos' valuations have fallen very sharply, the stats said over the past 18 months as operators were forced to cut tariffs to much lower level. to survive the competition. For investors, the big question is whether valuations could soar to what they were during the glory days of the Indian telecom sector four years ago.
In early 2007, when Vodafone bought the controlling stake in Hutchison Telecom International's Indian operations, domestic wireless penetration was a little over 14% and growth potential was enormous for the pan-India operators. This had taken telecom valuations to new highs. For instance, Bharti Airtel enjoyed per subscriber valuation of 41,500 while Vodafone which is now offering 3G in India, paid little over 37,000 per subscriber to Hutch. Today, the valuations have reduced to less than one-third of those levels.
This is because, even though telecom services reached over two-thirds of the population, most user additions were in remote areas of India with low usage, thereby reducing the per user revenue of telcos (ARPUs).
Today, average ARPUs and revenue per minute are half of what they were four years ago. Some analysts believe Vodafone's 3G in India offer could serve as a long-awaited trigger for mobile service providers to justify the billions of dollars of investments in licences and roll-out costs by moving their offerings up the value chain.
Indian telcos' valuations have fallen very sharply, the stats said over the past 18 months as operators were forced to cut tariffs to much lower level. to survive the competition. For investors, the big question is whether valuations could soar to what they were during the glory days of the Indian telecom sector four years ago.
In early 2007, when Vodafone bought the controlling stake in Hutchison Telecom International's Indian operations, domestic wireless penetration was a little over 14% and growth potential was enormous for the pan-India operators. This had taken telecom valuations to new highs. For instance, Bharti Airtel enjoyed per subscriber valuation of 41,500 while Vodafone which is now offering 3G in India, paid little over 37,000 per subscriber to Hutch. Today, the valuations have reduced to less than one-third of those levels.
This is because, even though telecom services reached over two-thirds of the population, most user additions were in remote areas of India with low usage, thereby reducing the per user revenue of telcos (ARPUs).
Today, average ARPUs and revenue per minute are half of what they were four years ago. Some analysts believe Vodafone's 3G in India offer could serve as a long-awaited trigger for mobile service providers to justify the billions of dollars of investments in licences and roll-out costs by moving their offerings up the value chain.
Vodafone 3G plans in India are also good. Vodafone is offering free services to start with, at no extra cost. This would enable people to get hand of Vodafone 3G plans in India. Not all the 3G companies are offering free 3G services, but they are charging higher for this.
Vodafone 3G tariff plans in India are much better than others. Other companies are charging 750 Rs for 2 GB data download, with a one month validity. Vodafone 3G tariff plans are cheaper.The tough war between the 3G carriers now will lead to the winner who will offer cheap plans like Vodafone 3G tariff plans in India.
The focus should be on aggressively pushing higher margin offerings, including Vodafone 3G in India , broadband , and other value-added services in metros and beyond. This, in turn, could also help in reversing the sluggish trend in the operational parameters of telcos.
The development may also encourage smaller mobile phone service providers to evaluate synergies of either working jointly or combining with larger players. Fiercely competitive markets such as Hong Kong, although smaller in size, have already seen their fair share of consolidation.
