Indian telecom service provider Vodafone is planning to invest $3 billion in the next two years to expand its mobile network in rural areas.
The massive investment is notwithstanding its nearly Rs 12,000 crore tax dispute with the government, PTI reported.
On Tuesday, Vodafone global CEO Vittorio Colao had a positive meeting with finance minister P Chidambaram on the tax issue.
Vodafone’s rural telecom thrust
Vodafone entered the Indian telecom market with the purpose of focusing on emerging telecom markets as its revenue started drying up in Europe. Vodafone India is one of the major revenue contributors to Vodafone group.
Rural expansion is important for Vodafone India, which is currently lagging behind Bharti Airtel in its rural presence. ( Airtel leads rural mobile market share in June with 24.47 percent: TRAI )
Since the telecom operator is focusing on m-pesa mobile money project, thrust on telecom network in rural India will give enough returns on its investments.
In June quarter of 2013, Vodafone lost its dominant position in the Indian rural market to Bharti Airtel, said Telecom Regulatory Authority of India (TRAI).
TRAI data released this week suggests that Bharti Airtel’s rural mobile market share increased to 24.47 percent market share in the June 2013 quarter from 23.99 percent in March quarter of 2013. Airtel, which has both 3G and 4G networks in India, had 85.9 million rural subscribers in June quarter.
On the other hand, rural mobile market share of Vodafone India decreased to 23.93 percent from 24.02 percent during the period. Vodafone had 84.01 million mobile customers in rural India.
However, as a percentage of total mobile subscriber base, Vodafone has 54.19 percent rural users against Bharti Airtel’s 45 percent, Idea Cellular’s 55 percent and Reliance Communications’ 23.97 percent in June 2013.
Idea Cellular, the Aditya Birla group owned telecom operator, is in the third position with 68.73 million rural mobile users. Its mobile market share in rural space increased to 19.58 percent from 19.21 percent.
Rural mobile market share of BSNL, the state-run telecom service provider, decreased to 9.62 percent from 10.17 percent. BSNL had 40.23 million mobile users in rural India, TRAI said.
Apart from Capex investment plans, Vodafone India is expected to increase its India stake to 100 percent utilizing the 100 percent FDI guidelines – announced recently by telecom minister Kapil Sibal.