Vodafone chief has big plans for India's Hutch Essar

Telecom giant Vodafone said it will invest more than two billion dollars in a drive to make its new Indian purchase, Hutchison Essar, the country's biggest mobile phone company.

"There's a lot of headroom to grow in the years to come," said Indian-born Vodafone chief executive Arun Sarin, facing local media for the first time since the British company announced at the weekend its 11.1-billion-dollar purchase of a 67 percent stake in India's fourth-largest cellular operator.

"We're committed to India, we're here for the long haul," he said.

Vodafone, the world's biggest mobile firm, aimed to grow Hutchison Essar's customers in India to 100 million from 23 million now, he said.

"We'll be investing over two billion dollars in India over the next two years. We want 100 million subscribers in a few years," said Sarin.

"We want Hutchison Essar to be India's biggest mobile company."

The purchase -- Vodafone's biggest acquisition since he took over the helm three years ago -- was expected to close in April, he said.

The company would become the largest in the Vodafone stable, measured by the number of customers within the next two years, he said.

The acquisition is part of Vodafone's push to lessen its dependence on saturated European markets, where mobile phone penetration is 100 percent.

Mobile penetration in India, the world's fastest-growing cellular market, is just 13 per 100 people, while in China, the only other country with a billion-plus population, it is 40 percent.

Sarin, son of an Indian army officer who studied engineering at the elite Indian Institute of Technology in Kharagpur, called the deal a "homecoming" but stressed it was also "very much strategically what the company wants to do."

"Arun Sarin's personal enthusiasm for the deal is icing on the cake," said the 51-year-old executive, now a US citizen, who arrived in India late Tuesday on a two-day trip to meet government officials and Hutchison Essar executives.

Vodafone aims to grow its Indian customer base by pushing into the rural market.

It has signed an infrastructure sharing pact with market leader and rival Bharti Airtel, saying it is the only way to expand the cellular network in India quickly and cheaply.

"We want every citizen to have the choice to have a mobile phone," Sarin said. "We've found that when you give people the chance to talk -- they do."

Right now, India's "mobile revolution" is mainly confined to the cities, but the real prize for phone companies is the vast rural market, where nearly 70 percent of India's 1.1 billion population lives, analysts say.

The government has forecast that by 2010 India will have over 500 million mobile subscribers.

Sarin said he wanted India's steel-to-shipping Essar Group, which owns a third of Hutchison Essar, to remain a partner in the company which holds a 16 percent share of the Indian fiercely competitive mobile market.

"That's my first preference, second and third that we stay and we build the company together," Sarin said.

The Ruia family, which owns the Essar Group and has termed telecommunications a core business, is expected to announce its plans within the next five weeks.

Essar had insisted it had first right of refusal in any Hutchison Essar stake sale by Hong Kong-based Hutchison Telecommunications, triggering speculation it might take legal action to disrupt the deal.

Sarin said Essar had no right of first refusal but "we have a true desire to partner them."

"Today is
Valentine's Day, we're sending roses to the Ruias and will visit them," he added with a smile.

Sarin said despite its infrastructure sharing pact with Bharti Airtel, which has some 33 million customers, the two would be rivals.

Bharti plans to invest around two billion dollars to expand its network in the financial year to March 2008.

Bharti chairman Sunil Mittal has said he hopes Hutchison Essar pushes from its fourth-place ranking to a "strong No. 2," but not to No. 1 spot.

source news : AFP