Vodafone says India operations marred overall uptick in 2009-10

Vodafone Group Plc is growing increasingly frustrated with its key Indian unit, which on Tuesday reported an impairment charge of 2.3 billion pounds ($3.3 billion), due mainly to fierce competition and escalating spectrum costs in India.

Vodafone plc, the world's second-largest mobile operator by revenue, entered the Indian market in 2007 after getting the better of its rivals in a high-profile auction. India was among the key growth markets in its emerging markets portfolio.

However, things have not really panned out to the company's liking in recent times with the Indian government granting licences to many more operators sparking off a fierce price war. Also a spectrum auction has gone far beyond expectations of analysts even as consolidation in the increasingly crowded market remains barred.

The impairment charge on the India assets along with chief executive Vittorio Colao's comments that India' s telecom rules did not make sense have marred an otherwise strong full-year perfomance.

"We have seen very strong price declines," Colao told reporters. "I don't think these rules (on consolidation and spectrum) make sense. India needs investment. India is a vast country with a vast population still not fully able to communicate.

"What India needs is investment and good technology and this will not come in an environment with too many operators and fragmentation of investment."