Vodafone India

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Vodafone India
Type Private
Industry Telecommunications
Predecessors Hutchison Essar Limited
Headquarters Mumbai, Maharashtra, India
Services Mobile telephony
Wireless broadband
Parent Vodafone Group
Website www.vodafone.in

Vodafone India Limited, formerly Vodafone Essar Limited, is the third largest mobile network operator in India after Airtel and Reliance Communication by subscriber base. It is headquartered in Mumbai, Maharashtra.[1] It has approximately 160 million customers as of December 2013. It offers both prepaid and postpaid GSM cellular phone coverage throughout India with good presence in the metros.

Vodafone India provides 2.75G services based on 900 MHz and 1800 MHz digital GSM technology. Vodafone India launched 3G services in the country in the January–March quarter of 2011 and plans to spend up to $500 million within two years on its 3G networks.[2] Vodafone added maximum subscribers in July 2014, with 13.6 lakh new users joining its network to take its base to 17.12 crore. Vodafone is the second largest player in telecom operator in India after Airtel, with a market share of 22.95%.

History[edit]

Max Touch, Orange and Hutch (1992-2007)[edit]

Hutch logo until November 2005.
Hutch logo from November 2005 until acquisition by Vodafone.

Hutchison Max Telecom Ltd. (HMTL), a joint venture between Hutchison Whampoa and the Max Group, was established on 21 February 1992.[3] The licence to operate in Mumbai (then Bombay) circle was awarded to Hutchison Max by the Department of Telecommunications (DoT) in November 1994.[4] The cellular service branded "Max Touch" was launched the same year.[5] Hutchison Max entered into the Delhi telecom circle in December 1999, the Kolkata circle in July 2000 and the Gujarat circle in September 2000. Licences for these circles had initially been awarded by the DoT in 1994, 1997 and 1995 respectively. Between 1992 and 2006, Hutchison acquired interests in all 23 mobile telecom circles of India.[4]

Hutchison Max rebranded Max Touch as Orange from 14 February 2000.[6] France Telecom (now Orange S.A.) acquired the worldwide rights for the Orange brand from Vodafone in May 2000, and planned to enforce its ownership of the brand in India. They made an offer to purchase part of Hutchison's India operations, but Hutchison India declined to sell.[7] Hutchison retained the rights over the Orange brand in India, but had to pay a royalty to France Telecom.[7] France Telecom left the Indian market in December 2004.[8][9][10]

HMTL was renamed Hutchison Essar Limited (HEL) in August 2005.[11] In Delhi, Uttar Pradesh (East), Rajasthan and Haryana, Essar Group was the major partner. But later Hutch took the majority stake. By the time of Hutchison Telecom's Initial Public Offering in 2004, Hutchison Whampoa had acquired interests in six mobile telecommunications operators providing service in 13 of India's 23 licence areas and following the completion of the acquisition of BPL Mobile that number increased to 16. In 2006, it announced the acquisition of a company (Essar Spacetel — A subsidiary of Essar Group) that held licence applications for the seven remaining licence areas. Initially, the company grew its business in the largest wireless markets in India — in cities like Mumbai, Delhi and Kolkata. In these densely populated urban areas it was able to establish a robust network, well-known brand and large distribution network – all vital to long-term success in India. Then it also targeted business users and high-end post-paid customers which helped Hutchison Essar to consistently generate a higher Average Revenue Per User (ARPU) than its competitors. By adopting this focused growth plan, it was able to establish leading positions in India's largest markets providing the resources to expand its footprint nationwide. In February 2007, Hutchison Telecom announced that it had entered into a binding agreement with a subsidiary of Vodafone Group Plc to sell its 67% direct and indirect equity and loan interests in Hutchison Essar Limited for a total cash consideration (before costs, expenses and interests) of approximately $11.1 billion.

A 'You and I' print advertisement of Hutch featuring Cheeka (dog)

Hutch was often praised for its award winning advertisements which all follow a clean, minimalist look. A recurrent theme is that its message "Hi" stands out visibly though it uses only white letters on red background. Another successful ad campaign in 2003 featured a pug named Cheeka following a boy around in unlikely places, with the tagline, "Wherever you go, our network follows." The simple yet powerful advertisement campaigns won it many admirers. Ads featuring the pug were continued by Vodafone even after rebranding. The brand subsequently introduced ZooZoos which gained even higher popularity than was created by the Pug. Vodafone's creative agency is O&M while Harit Nagpal was the Marketing Director during the various phases of its brand evolution.

Vodafone purchases Essar's stake[edit]

In July 2011, Vodafone Group bought the mobile phone business of its partner Essar for $5.46 billion. This meant Vodafone owns 74% of Essar.[12] On 11 February 2007, Vodafone agreed to acquire the controlling interest of 67% held by Li Ka Shing Holdings in Hutch-Essar for US$11.1 billion, pipping Reliance Communications, Hinduja Group, and Essar Group, which is the owner of the remaining 33%. The whole company was valued at USD 18.8 billion.[13] The transaction closed on 8 May 2007. In April 2014, India based Piramal Group sold its 11% Stake in Vodafone India to Prime Metals, an indirect subsidiary of Vodafone Group.[14]

Vodafone-Hutchison tax case[edit]

Vodafone was embroiled in a $2.5 billion tax dispute with the Indian Income Tax Department over its purchase of Hutchison Essar Telecom services in April 2007. It was being alleged by the Indian Tax authorities that the transaction involved purchase of assets of an Indian Company, and therefore the transaction, or part thereof was liable to be taxed in India.[15]

Vodafone Group Plc. entered India in 2007 through a subsidiary based in the Netherlands, which acquired Hutchison Telecommunications International Ltd’s (HTIL) stake in Hutchison Essar Ltd (HEL)—the joint venture that held and operated telecom licences in India. This Cayman Islands transaction, along with several related agreements, gave Vodafone control over 67% of HEL and extinguished Hong Kong-based Hutchison’s rights of control in India, a deal that cost the world’s largest telco $11.2 billion at the time.[16]

In January 2012, the Indian Supreme Court passed the judgement in favour of Vodafone, saying that the Indian Income tax department had "no jurisdiction" to levy tax on overseas transaction between companies incorporated outside India. However, Indian government thinks otherwise. It believes that if an Indian company, Hutchison India Ltd., conducts a financial transaction, government should get its tax out of it. Therefore, in 2012, India changed its Income Tax Act retrospectively and made sure that any company, in similar circumstances, is not able to avoid tax by operating out of tax-havens like Cayman Islands or Lichtenstein. In May 2012, Indian authorities confirmed that they were going to charge Vodafone about INR20000 crore (US $3.3 billion) in tax and fines. The second phase of the dispute is about to start.[17] The Bombay high court on Thursday directed the Income-Tax Appellate Tribunal (ITAT) to hear a Rs.8,500 crore transfer-pricing tax dispute relating to the Indian arm of Vodafone Group Plc from 21 February on a daily basis till a final order is passed.

Mobile Services[edit]

3G[edit]

On 19 May 2010, the 3G spectrum auction in India ended. Vodafone paid INR 11617.86 million (the second highest amount in the auctions) for spectrum in 9 circles. The circles it will provide 3G in are Delhi, Gujarat, Haryana, Kolkata, Maharashtra & Goa, Mumbai, Tamil Nadu, Uttar Pradesh (East) and West Bengal.[18]

On 16 March 2011, Vodafone launched 3G services in Uttar Pradesh (East) in the city of Lucknow.[19] It was the fifth private operator (seventh overall) to launch 3G services in the country, following Tata Docomo, Reliance Communications, Airtel, and Aircel.

On 23 June 2011 Vodafone launched 3G service in Kerala by joining with Idea in an Intra Circle Roaming agreement. Initially Vodafone 3G services will be available in the following cities in Kerala – Ernakulam, Aluva, Calicut, Koyilandy, Alappuzha, Cherthala, Malappuram and Manjeri. On 28 June 2012, Vodafone launched a new international roaming package under which the users shall have not to pay multiple rentals in the countries they are visiting.[20]

M-Pesa[edit]

M-Pesa, branded as M-Paisa (the paisa being the largely unused subunit of the Indian rupee), was launched in India[21][22] as a close partnership with HDFC bank in November 2011.[23] Development for the bank began as early as 2008. The service continues to operate in a limited geographical area in India. Vodafone India had partnered with both HDFC and ICICI,[24] ICICI launched M-Pesa on April 18, 2013.[25] Vodafone plans to rollout this service throughout India.[26] The user needs to register for this service by paying 200 Rupees and there are charges levied per M-Pesa transaction.[27][28]

Angel Stores[edit]

As of 3 September 2013, there were a total of 16 Vodafone Angel Stores in 14 states, all staffed entirely by women. Stores currently operate in Agra, Ahmedabad, Bhubaneshwar, Chennai, Delhi, Goa, Haryana, Hyderabad, Jaipur, Kerala, Kolkata, Lucknow, Mumbai, Mysore, Pune, Shillong, Vadodara and Rajkot.[29]

According to Marten Pieters, Managing Director and CEO, Vodafone India, "The Angel Stores are a part of Vodafone’s commitment to provide our women employees with one of the most secure and productive work environment. Additionally, our women customers feel more welcomed while visiting the store."[30]

Subscriber base[edit]

Following is the Vodafone India subscriber base statistics as on September, 2014.[31]

Subscriber Base Statistics as on September, 2014
Telecom Cicle No. of Subscribers
Gujarat 15,801,117
Uttar Pradesh(East) 14,526,236
Maharashtra 12,977,123
West Bengal 11,165,667
Tamil Nadu 9,777,927
Rajasthan 8,565,366
Uttar Pradesh(West) 8,999,073
Andhra Pradesh 5,224,689
Delhi 8,449,120
Goa 7,134,576
Karnataka 6,452,620
Kerala 6,067,506
Bihar 6,381,278
Kolkata 4,084,284
Punjab 4,309,853
Haryana 4,437,015
Madhya Pradesh & Chhattisgarh 4,101,877
Chennai 2,091,411
Odisha 2,789,575
Assam 2,188,073
North East 928,563
Jammu & Kashmir 666,009
Himachal Pradesh 475,329
Mumbai 6,160,353

Total number of Vodafone India Subscribers : 141,519,840, i.e. 21.54% of the total 657,158,013 Indian mobile phone subscribers.

Awards and recognition[edit]

The Brand Trust Report,[32] 2011 published by Trust Research Advisory has ranked Vodafone[33] as the 16th most trusted brand in India.

Timeline[edit]

1992: Hutchison Whampoa and MAX group establish Hutchison Max

2000: Acquisition of Delhi operations and entry into Calcutta (now Kolkata) and Gujarat markets through Essar acquisition

2001: Won auction for licences to operate GSM services in Karnataka, Andhra Pradesh and Chennai

2003: Acquired AirCel Digilink (ADIL — ESSAR Subsidiary) which operated in Rajastan, Uttar Pradesh East and Haryana telecom circles and rebranded it 'Hutch'.

2004: Launched in three additional telecom circles of India namely Punjab, Uttar Pradesh (West) and West Bengal.

2005: Acquired BPL Mobile operations in 3 circles. This left BPL with operations only in Mumbai, where it still operates under the brand 'Loop Mobile'.

2007: Vodafone acquires a 67% stake in Hutchison Essar for $10.7 billion. The company is renamed Vodafone Essar. 'Hutch' is rebranded to 'Vodafone'.

2008: Vodafone acquires the licences in remaining 7 circles and starts its pending operations in Madhya Pradesh circle, as well as in Orissa, Assam, North East and Bihar.

2011: Vodafone Group buys out its partner Essar from its Indian mobile phone business. It paid $5.46 billion to take Essar out of its 33% stake in the Indian subsidiary. It left Vodafone owning 74% of the Indian business.

2014: On 11 April Vodafone acquires 100 percent stake in Vodafone India.

2014: On 6 August Vodafone India launches Vodafone RED 4.New Postpaid plans across India.

See also[edit]

References[edit]

  1. ^ "Vodafone Essar Ltd: Vodafone India — Mobile Communications worldwide". Vodafone.in. 2009-03-31. Retrieved 2009-05-01. 
  2. ^ "News By Industry". The Times Of India. 21 October 2010. [dead link]
  3. ^ corporatedir.com/company/hutchison-max-telecom-limited
  4. ^ a b "THE HIGH COURT OF JUDICATURE AT BOMBAY - WRIT PETITION NO.1325 OF 2010". Bombay High Court. Retrieved 19 November 2013. 
  5. ^ "Max India Ltd". The Times Of India. 
  6. ^ "The Story of the Cellular Phone Brand Orange - Abstract". icmrindia.org. Retrieved 19 November 2013. 
  7. ^ a b "The Story of the Cellular Phone Brand Orange - Orange is Squeezed". icmrindia.org. Retrieved 19 November 2013. 
  8. ^ "France Tele to lap up Orange in Oct". The Times of India (Economic Times). 26 September 2003. Retrieved 9 June 2012. 
  9. ^ Mathew, James; Delhi, New (2 December 2001). "France Tele to transfer entire stake in BPL Mobile". The Times Of India. Retrieved 9 June 2012. 
  10. ^ "France Telecom exits BPL, Essar buys 9.9%". 4 December 2004. Retrieved 9 June 2012. 
  11. ^ http://courtnic.nic.in/supremecourt/temp/sc%202652910p.txt
  12. ^ Vodafone finalises India mobile subsidiary buyout
  13. ^ "/ Companies / Telecoms — Investors welcome Vodafone deal". Ft.com. Retrieved 2009-05-01. 
  14. ^ "Piramal Group to sell Vodafone India stake for Rs. 8900 crore". IANS. news.biharprabha.com. Retrieved 10 April 2014. 
  15. ^ Lamont, James (2011-06-30). "Vodafone warns India tax bill to hit $5bn". FT.com. Retrieved 2013-06-15. 
  16. ^ [1].
  17. ^ "Vodafone-Hutchison deal: Vodafone wins Rs 11,000 crore tax case - The Times of India". The Times Of India. 
  18. ^ India’s 3G Auction Ends; Operator And Circle-Wise Results – MediaNama
  19. ^ GSMA Mobile Business Briefing – Telecoms news from around the world
  20. ^ "Vodafone India offers new international roaming pack". 28 June 2012. 
  21. ^ "India Launch Desire". Retrieved 28 June 2012
  22. ^ Department for International Development [DFID]. (2008, 9 May). Mobile phone banking in Africa [Video]. Retrieved 19 February 2009
  23. ^ HDFC Launch. "HDFC Launch". Retrieved 28 June 2012
  24. ^ ICICI Bank. "ICICI Bank". Retrieved 28 June 2012
  25. ^ Russell, Jon (17 April 2013). "Vodafone launches M-Pesa mobile banking service in India, targeting 700m ‘unbanked’ people". The Next Web. Retrieved 20 April 2013. 
  26. ^ http://gadgets.ndtv.com/telecom/news/vodafone-to-bring-m-pesa-service-to-20000-customers-in-mp-500891
  27. ^ http://www.thehindubusinessline.com/industry-and-economy/info-tech/vodafone-launches-money-transfer-service-mpesa-in-delhi/article5044945.ece?ref=relatedNews
  28. ^ http://moneysaverindia.com/finance/ignore-both-airtel-money-and-m-pesa/
  29. ^ Bafna, Sanjay. (2013-09-03) Vodafone Launches Women-run Angel Stores in Haryana. Telecomtalk.info. Retrieved on 2013-09-18.
  30. ^ "Vodafone to expand all women stores network across the country". Business Standard. 2013-03-05. Retrieved 2013-06-15. 
  31. ^ http://coai.com/Sub%20Figs/GSM%202011/All%20india%20GSM%20sub%20figures%20Jun%202011.xls
  32. ^ "A Matter of Trust". Financialexpress.com. Retrieved 2013-06-15. 
  33. ^ "India's most trusted brands - Rediff.com Business". Rediff.com. 2011-01-20. Retrieved 2013-06-15. 

External links[edit]