Vodafone Plc has earmarked an additional investment of Rs 7,000 crore in India primarily to upgrade its mobile data network and buy fresh spectrum.
This is on top of the Rs 10,141-crore investment announced by the company to increase its stake in the Indian venture from 64 per cent to 100 per cent.
The fresh funding is part of a global initiative, called Project Spring, under which Vodafone Plc has set aside about Rs 70,000 crore to upgrade its network capabilities in different countries.
The British telecom major is funding this project with the $130 billion it received from selling its stake in US mobile operator Verizon Wireless.
Speaking to Business Line , Colman Deegan, Chief Financial Officer, Vodafone India, said: “The Vodafone Group realises the importance of the Indian market and has given us 10 per cent of the total fund under Project Spring, so that we can grow.” The Indian operation is now the third most important for Vodafone Group globally in terms of revenue.
Network rollout
Vodafone India invests between Rs 4,000 crore and Rs 5,000 crore every year on network rollouts. The fresh funding would mean that the company will be able to increase its capital expenditure by 30-40 per cent.
“The investment focus is on data and 3G. We need more 3G spectrum in areas where we don’t have airwaves. We still have catching up to do in existing markets in terms of rollouts. The market is there as data is growing multiple times,” said Deegan adding that the additional investment would be made over the next couple of years. Vodafone has invested a total of Rs 56,000 crore till date on spectrum and capital expenditure.
Vodafone India’s revenues have grown 13.5 per cent to Rs 18,480 crore during the first six months of the current fiscal. The company’s Ebitda has grown by 30.6 per cent to Rs 6,519 crore.
Marten Pieters, Managing Director and CEO, Vodafone India, said that the revenue growth has been due to uptake of data services, marginal increase in tariffs and rational acquisition of subscribers.
He, however, expressed concern over the decision by the Telecom Commission to increase the reserve price for the next round of auctions.
“The TRAI report was very good. You start an auction at a lower level and not where you end. Now the price set by the Commission is at a level where you cannot expect too much competition,” said Pieters.