IndiaPost.com - Vodafone pledges $2 bn investments, cheap tariffs

Vodafone said it would invest two billion dollars over the next couple of years to expand Hutch-Essar reach in rural India, while promising cheaper mobile rates and better services to customers.

"We will try to get more rural areas covered with this investment. The money will be invested in infrastructure and various operations and for expansion of tele-density and reach to customers," Sarin told reporters here on his first visit after the Hutch-Essar win.

India-born Sarin said customers can look forward to cheaper call rates, better handsets and value-added services like banking and money transfer once it enters the country.

While stating that he expects to close the deal precisely in April, Sarin said the company would retain the Hutch brand for some time and that customers would be consulted before changing the brand.

"This (Hutch-Essar) is the biggest company in the Vodafone group in terms of subscriber base," he said, commenting on Hutch-Essar, India's fourth largest mobile player with 24.4 million customers.

He said he now intends to make Hutch-Essar the country's number one player with a target of 100 million customers.

Mobile leader Bharti Airtel has over 33 million users.

Sarin, who graduated from IIT-Kharagpur, also described the deal as a homecoming. "This is what we used to talk the IIT days."

While Vodafone had bid 11.1 billion dollars for Hong Kong-based Hutchison Telecom's (HTIL) 67 per cent stake in the mobile venture, its actual stake acquisition would be only 52 per cent as the remaining 15 per cent is held by minority Indian shareholders who have opted to continue as partners.

On Vodafone's offer to buyout the 33 per cent stakeholder Essar from the mobile venture, Sarin said his first, second and third preference would be that the Indian conglomerate should stay put. "But its their decision... my intention is to help Essar take a positive decision."

He had earlier ruled out increasing the offer for buying out Essar, saying it would be at the same price as given for Hutchison Telecom's 67 per cent stake.

If Essar decides to exit, Vodafone had other options, which includes minority shareholders increasing their stake to 26 per cent. -PTI

"This is only one option. Another obvious option is that we will go with another Indian partner... its all too early to say," Sarin said.

On provisions that allow Vodafone to walk out of the deal if it gets entangled in legal conflicts for more than a year, he said: "We are here in India to stay for a long time, not to walk out... any contract has certain clauses... we intend to be here for a long time."

Sarin said Cotions and IT Minister Dayanidhi Maran was very excited about Vodafone's entry into India because of the capital that the company would inject and greater telecom penetration.

Hutch-Essar Managing Director Asim Ghosh, who holds under five per cent in the venture, said that Hutch covers 40 percent of the population in the 16 circles where it has operations.

This would increase to 45 per cent when services are up and running in all the 23 circles, he said.

On the revamping the Hutch-Essar management, Sarin said no firm decision has been taken as yet, but "my vote is with Asim Ghosh." –PTI