Vodafone to expand investments in India but seeks better FDI laws

Vodafone Plc's chief executive officer Vittorio Colao, who took over the top job at Europe's largest telecom firm from Arun Sarin in 2008 (See: Arun Sarin to leave Vodafone in July), is keen on expanding operations and increasing investments in India.

Colao said that Vodafone sees eight to nine million mobile subscribers' addition here. This means India needs more investment. It will continue to invest more here as there are opportunities here. Vodafone plans on invested Rs2 for every rupee earned.

Colao has also expressed concerns over the lack of clarity in Foreign Direct Investment (FDI) policies in India saying that they were open to several interpretations. Citing the case of China he said that FDI inflows to China were four times that of India. To maintain 8 per cent growth rate India must have a clear vision and attractive polices.

Colao also said that the existing spectrum allocation norms in the country required to be reviewed. He pointed out that while the global average spectrum holding for for each operator was 15-20 Mhz , in India operators are expected to roll out mobile services with just 6.2 Mhz.

Expressing his doubts over the slicing of spectrum, which is inadequate in India and does not allow operators to provide quality services. Spectrum should be allocated keeping a long-term view to provide each service provider adequate space for providing more efficient services, he stressed.

Vodafone had bought a controlling stake of 67-per cent in Huchison Essar in 2007 from Hong Kong's Huchison for $11 billion. The Ruias of the Essar group retained a 33-per cent stake in the JV, which was renamed Vodafone Essar.

Following the deal, Vodafone got involved in a dispute between Hutchison and Essar over the ownership of BPL Mobile Communications. The Essar group blamed Hutchison for missing a deadline for getting regulatory approval for buying out BPL Mobile as part of an earlier agreement. The matter was subsequently taken up by the arbitration panel.

Prior to buying Hutchison, Vodafone had tried entering Indian telecom market via Bharati. It held a minority stake of 10 per cent in Bharti Airtel. However, Vodafone later divested the bulk of the stke, retaining a 4-per cent indirect stake in Bharti Airtel, which Colao said the company would like to retain.

Vodafone has also invested in mobile network infrastructure by investing in mobile towers company Indus Towers, jointly with its other owners, Bharti and Idea. Indus Towers was set up by the three rivals to provide passive infrastructure services in India to all telecom operators across the world on a non-discriminatory basis.