Vodafone to invest more in India, rules out Airtel stake sale

Vodafone’s global CEO Vittorio Colao on Monday said India must offer increased clarity on its foreign direct investment (FDI) policy across sectors. “The FDI policy in India is complex and lends to multiple interpretations,” he said at a CII conference. Mr Coloa refused to elaborate on the specific modifications he wanted in the country’s FDI policy. Regulatory clearances for Vodafone’s acquisition of Hutchison’s operations in India in 2007 were delayed for several months as the deal was embroiled in a controversy over violation of FDI norms. Mr Coloa also said FDI flows to China were four times higher than that in India. “If India wants to maintain 8% growth rate, it will have to win the competition for global investment. Increased FDI means, better products and services and creation of more jobs,” he said. Vodafone offers mobile services in India in partnership with Essar group and is the second-largest GSM operator here with over 60 million customers. Mr Coloa also said that India is different from all other markets as it adds between 8-10 million new mobile users every month. The company is launching operations in B and C circles where Vodafone is not present. These circles have a population of 300 million, equivalent to that of Pakistan and Bangladesh combined. “Vodafone is committed to investing in India to expand its operations,” he said. He said Vodafone had no plans to sell its 4% indirect stake in Bharti Airtel. But he did not comment on the deal of 3G auctions in India and the finance ministry’s demands to hike the base price for 3G spectrum. The Vodafone CEO also expressed concern over spectrum allocation policy in India. He pointed out that globally, operators had between 15-20 Mhz of spectrum, while India still debated if telcos should be given radio frequencies beyond 6.2 Mhz. While most markets abroad have 3-5 operators, radio frequencies in India are divided between 10-12 players. Mr Coloa said the allotment of spectrum in India was too little. This in turn forced telcos to compromise on service quality. Mr Colao said Indian states which had a higher degree of mobile penetration were growing faster. Mobile growth in India accelerates after penetration touches the 25% mark and the country therefore had to build more networks to facilitate this growth.