We expect higher prices for 3G mobile usage

Written by fe Bureaus | Updated: Jul 29 2010, 04:35am hrs
Vodafone recently posted 26.4%y-o-y increase in its India revenues, which touched 954 million in the first quarter this fiscal. The company expects 3G services to cost more than 2G voice services. Marten Pieters, MD & CEO, Vodafone Essar, who had recently expressed concern about the tariff war in India, said capital investments by telecom players could go slow on the back of unfavorable regulatory approvals and lower prices. In an interaction with FEs Rachana Khanzode, he adds that the firm is not concerned about missing out on the BWA spectrum in the short-run.

Have your concerns with respect to the tariff war abated Do you see competitive pricing for 3G

The tariff war has clearly indicated that those operators that do not have scale cannot sustain it. We have sustained. We have paid Rs11,600 crore for 3G licences in 9 circles so it has probably balanced it out. We are constantly investing on network upgrade. We expect higher prices for 3G usages.

Considering the ongoing security issue with the equipment providers, do you think 3G rollout could get delayed

With the limitations surrounding the equipment providers, the operators have been struggling, especially those dependent on the Chinese equipment providers.

Some relief has been given to the non-Chinese vendors so that it does not impact the roll-out. However, we have received enough confirmation from the Indian government about resolving the security issues. We will launch 3G services by the year end across all circles, if we get the spectrum in September.

Are you concerned that you have missed out on BWA

No, it is not a concern in the short-run because BWA is still just a spectrum. The technology is still evolving and we hear that Reliance Infotel is looking at 4G technology that would take some time to develop and the ecosystem around it would take additional time.

How do you think regulatory issues around the mergers and acquisition could impact the industry

Being a capital-intensive industry, added to spectrum scarcity, M&As are important. For the industry to be sustainable, the government should drive M&As. Recent recommendations have made it even more painful for the industry to do so. We have seen capital inflow in the industry going down as a result of the pricing and unfavorable regulatory environment. The decision cycles have also gone slow. So, there could be low capital inflows for few years.

Is Vodafone open to M&As

Being a long term player, I would suggest it to the board , if itbrings us additional spectrum.