Vodafone-Essar looks at mass market

Announces 50% cut in prepaid monthly recharge.

Vodafone-Essar, India’s fourth largest mobile service provider, is looking to add over 1.5 million subscribers a month in this financial year or 18 million new customers in a year, Vodafone CEO Arun Sarin told reporters today.

Simultaneously, the company announced a 50 per cent reduction in the minimum monthly recharge required for a prepaid customer to Rs 99 from the earlier Rs 199 effective June 16, 2007.

This is the mobile service provider’s first board meeting since Vodafone acquired a 67 per cent stake in the company, formerly called Hutchison-Essar, from Hong Kong-based Hutchison Whampoa earlier this year.

To support the move, which marks a strategic shift from its focus on revenue per customer to the mass market, the board has approved doubling investment for the current year to $2 billion.

To gain consumers and market share, Sarin said the company would also introduce low-cost handsets.

The company’s new monthly target, which would translate into 65 per cent growth in subscriber numbers, is larger than last year’s 1-1.2 million. The company has over 28 million subscribers and operations in all 23 telecom circles in the country.

The target would also be the same as India’s leading GSM operator, Bharti Airtel’s, a former Vodafone partner. The Sunil Mittal-owned company has over 40 million subscribers in the 23 circles.

On the integration of Vodafone with Hutchison-Essar, Sarin said, “Whether it is on the network, marketing or human side, the integration is going on smoothly.”

Vodafone-Essar MD Asim Ghosh said the formal integration would take place by the end of September, and after that it would be an ongoing process.

On the constitution of the board, Sarin said there would be 12 members on it, with eight from Vodafone and four from Hutch. Ravi Ruia is the chairman of the new company, with Arun Sarin as vice-chairman and Asim Ghosh as managing director.

There will be two independent directors, Analjit Singh, who owns a stake in the company, and C R Dua. Prashant Ruia, Anshuman Ruia, Vittorio Colao and Vikash Saraf will be board directors representing Essar. Paul Donovan, Gavin Darby and Robert Barr will represent Vodafone.

Reiterating an issue he had raised earlier, Sarin said the company was looking at infrastructure-sharing in the country and was in talks with other mobile firms.

“Infrastructure sharing is the best possible way to reach the 1.1 billion people living in India. We are setting up a platform with whoever wants to join us, so that we can build our network in India in a cost-effective way,” he said.