Vodafone hits back at RJio’s allegations on rural service

Vodafone’s CEO Vittorio Colao described as “ludicrous” the recent suggestions from Reliance Jio that the three main players in the sector had little interest in providing low-cost services to rural areas, among other charges, as it seeks to scrap interconnect usage charges, paid by a service provider to connect a call to a customer’s network.

“The issue is, of course, very self-serving for Jio. Let’s look at the reality — we have built our services in rural areas over the past 15 years, where people have been able to receive phone calls for 15 years,” he said during a call to discuss the company’s first quarter trading update. “The claim that we have benefited from this is clearly ludicrous. There would be no service in certain areas without charges on incoming calls.”

“This is part of the usual posturing of the new comer. We will push back on those allegations. It’s important to preserve some incentives to build networks where not a lot of economic activity is taking place and where a lot of people need to be connected.”

He brushed aside concerns about the new Jio Phone. “It’s a free phone but you have to pay ₹1,500…we see the upfront payment as paying for the phone…we will have to see exactly how the pricing will evolve over time…”

He said the company hadn’t made a decision regarding Indus Towers, but added that the company was considering the possibility of an IPO.

“We are considering all options,” he said. “It’s a quality asset that many people would like to be exposed to…we are convinced that the Indian business should be self-funding and if there is need for some capital, Indus can provide some of it,” he said.

Colao was speaking as the company reported 2.2 per cent growth in its group organic service revenue, with Europe delivering a strong performance. In India, which is treated as a discontinued operation by the group, following the announcement of the planned merger with Idea Cellular, organic service revenue fell by 13.9 per cent as a result of continued price competition.

“Despite a year-on-year decline, sequential quarterly trends are stabilising,” it said. The company expects the merger to close in 2018.

“From an operational perspective, the group remains highly focussed on the management of the business and committed to its success, both prior to the completion of the merger and there after.”