Vodafone Stumbles On 1 Billion Potential Customers - InformationWeek

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2/13/2007
04:04 PM
Eric Ogren
Eric Ogren
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Vodafone Stumbles On 1 Billion Potential Customers

Remember how InformationWeek reported that one of the main goals of this year's 3GSM World Congress was to bring more subscribers into the mobile fold? Well, Vodafone snagged the lion's share of potential wireless subscribers this week with its purchase of a majority stake in Hutchison Es

Remember how InformationWeek reported that one of the main goals of this year's 3GSM World Congress was to bring more subscribers into the mobile fold? Well, Vodafone snagged the lion's share of potential wireless subscribers this week with its purchase of a majority stake in Hutchison Essar.Two-thirds of Hutchison Essar, the fourth-largest mobile operator in India, now belongs to U.K.-based Vodafone Group, which also owns 40% of Verizon Wireless. The winnings, part of a two-month bidding war, came when the deal closed this past Sunday. Hutchison Telecommunications, a holding company based in Hong Kong, sold its majority stake in the wireless operator for $18.8 billion.

(We'll ignore that Hutchison Telecommunications' shareholders are considering revolting over the final sale price, thinking that the company could have fetched another $1.2 billion, and that the minority shareholders of Hutchison Essar, the Ruia brothers, aren't too pleased about being left out of the deal and might cause legal problems for Vodafone in the near future.)

So where do the 1 billion customers come in? Well, to date, about 150 million people in India have subscribed to mobile phone services. That number reflects about 13.6% of India's population of more than 1.1 billion people. Subtract 150 million and you get the picture. Of course, 13.6% represents a very small percentage of the population, and overall teledensity sits at only 17%. The possibilities for growth here are nearly endless, as many people are skipping wireline services altogether in favor of mobile communications.

Growth is one thing that Vodafone appears to be accustomed to. With the purchase of Hutchison Essar, Vodafone added another 25 million to its existing 200 million-plus customers. Vodafone also doesn't appear to be wasting much time in moving forward with plans in India. It is hoping to merge portions of Essar's GSM-based network with India mobile operator Bharti Airtel, a strategy it calls crucial to meeting budget figures for the operation. It also will be moving forward with plans to reach out to rural Indians in the hopes of luring them to Vodafone's service.

So, while Vodafone didn't exactly stumble on the potential customers (I'm sure it was at least slightly thought out ahead of time), it will have to work to sign them up and grow Vodafone's worldwide customer base.

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