12 thoughts on “Vodafone’s $11.1 billion passage to India”

  1. If Vodafone can help accelerate Hutch’s network rollout in more rural areas in India as well as help to grow Hutch’s content offerings, the company will have a better chance of gaining some value from this deal. Bharti-Airtel and Reliance already have a 6-9 month head start because they currently operate in all 23 telecom circles of India — Hutch only operates in 16, but has applied for licenses in the other 7.

    Despite the large price tag associated with the purchase (too much), the reality is that India now has 140+ MM subscribers and less than 20% penetration. Low/declining ARPUs are certainly an issue, so effective monetization is the name of the game.

  2. There is more than meets the eye here with an extensive infrastructure sharing agreement between Bharti and Vodafone. Bharti will in one way or another always be part of Vodafones end-game in India.

  3. It appears that Vodafone and Airtel have signed an agreement to share their network infrastructure. That is something to be factored in when you talk about the growth and future ARPU for Vodafone in the second-tier and rural areas.

    According to a Bloomberg report Vodafone paid a little over $900 for each Hutch-Essar customer.


  4. “bad deals, ill-timed exits and overpaying are part of company’s legacy.”

    Hmm. Maybe you should stick to the US market. Voda has one of the best dealmaking histories in the industry. Buying Mannesman for stock and selling Orange for 30bn in cash? Creating Verizon Wireless? Telsim? Sure, they’ve had a few mis-steps, but if they’re the worst what about BT? Or France Telecom – remember their German adventure? Or DT?

    Personally, I alwways rely on marketing professors for valuation tips 😉 This isn’t a ARPU-based price, let alone a per-sub price – it’s a growth price, in a market at 10% penetration. Vod is betting that it can make enough money from all this

  5. bge,

    i would give you that verizon wirless deal is an excellent one. just to counter your point, Japan and the money spent there would be a good start.

    also, on the issue of buying into a market for growth is generally a good idea, but not such a good idea when the top 10% of the market has already been skimmed. they will have to build out in rural india, upgrade their infrastructure in major cities and compete in a price sensitive market (ARPU declines)

    lastly, come on the professor has a nice analysis despite being a marketing pro. lets not hold against him 😉

  6. Vodafone has a habit of paying in stock rather than cash which has enabled it to do some great deals.

    In someways, it’s faltered when it hasn’t been bold enough, while it owns a huge chunk of Verizon, it doesn’t have much control and does get any dividends, perhaps it would have been better buying AT&T’s mobile operations instead (it’s the right technology for starters)

  7. For Vodafone I guess there are couple of high priority agenda
    Upgrade 3G network: – This will enable them to offer more service and hence increase in revenue per customer
    Install new network in rural area: – This will attract new customer, but I guess main point is what does rural base customer wants? Is it speed or reliability?

    I like the way whole Wireless industry is growing in India

  8. Well can you explain to me why Vodafone’s stock went up and Reliance Communication’s down ??
    I will start with this i disagree with you.
    This is a great deal for everybody and this is they last deal in indian market which happens to be fastest growing market.
    As far as ARPU is concerned Hutch’s is definitely is highest and as you may know they have costumer who are ready to pay premium over other for better quality.

    I know because my father happens to be a hutch costumer and recently changed his number but still kept hutch as the service provider.

    Wanna bet that this is going to be a good deal even in you eyes in next 2 year ?


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