Marten Pieters, Managing Director and CEO, Vodafone India, has had to tackle issues such as one-time spectrum fee and renewal of licences in some circles (that fall due in 2014), over the last few days.
Recently in Kolkata, Pieters spoke to Business Line on issues of moving jobs to India, spectrum pricing, 3G roaming, the need for tariffs to go up, and Vodafone’s investment plans.
Edited excerpts:-
There have been reports that Vodafone would move jobs to India. Your comments.
That is something you have to direct to the Group. Here in India, it’s a separate legal entity. However, generally speaking the European economy is not doing well and operators are under-pressure. Revenues have suffered. And the way to create cost savings is to move jobs to a place like India, where costs are lower.
The one-time spectrum fee payment still seems to be unresolved. Your comments.
The one-time spectrum issue is in court and has been stayed. We think one-time spectrum fee is simply not in line with the existing licence. Existing licences are a contract between the Government and operators. You cannot unilaterally change a contract. It’s a position that all operators, and not just Vodafone, have taken.
Licence extension in Delhi, Kolkata and Mumbai is due in 2014. What is your opinion on the Government’s decision to auction spectrum here?
Licence extension in a way is work-in-progress. The Government has taken a certain position where new spectrum auctions are coming up. Let us see how the pricing evolves. We think the whole issue is not about licence extension. It is really about the pricing of spectrum.
The Government typically, in the last few auctions have worked with too high reserve price, especially in Metros. And that’s the reason why auctions did not fly.
If you compare the spectrum price in Mumbai or Delhi to that of realised prices in Europe then it is 10 to 70 times higher. Now I don’t see why in Mumbai or Delhi you could make money on such expensive raw material.
How optimistic are you about the 3G data services?
3G services have taken off very well last year. The first year was building networks and people getting used to it. Now, we see a genuinely good volume of 3G uptake. 3G volumes have overtaken 2G data volumes, even when 3G networks are not as big as the 2G ones. So we are very optimistic.
There also seems to be some problem with 3G intra-circle roaming pacts. Your comments.
We think we are entitled to this 3G roaming pact. And the Government clearly thinks we are not. So let’s see how that adds up.
How do see tariff movements in India, especially in view of competition? Are they going to go up or bottom out?
I don’t think there is any scope for reducing tariffs. If you look at the outgoing tariffs, the industry average is around 44-45 paise per minute. Ours is around 60 paise per minute, which is very much in line with the other bigger operators.
If the top three operators are at 60 (paise) and the industry average is at 44 (paise) then one can imagine how bad it is for the rest. So those who are constantly stunting with low tariffs need to go up.
Will Vodafone increase tariffs?
The industry is in a bad financial condition. Many operators are reducing activity or have stopped working. Most have huge debts. So to repair the industry we need tariff hardening. Surely not tariff drops.
For me, it’s not about hiking tariffs, but making sure that the industry comes to a sustainable level.
What are your investment plans in India?
We have invested around Rs 55,000 crore over the last five years here across 3G data networks and back-end of data. We are still investing more or less at levels similar to what have been done before. There is no slow down in our investments. Nor do we plan to change our investment levels at the moment.