Vodafone finds India tough going

NEW DELHI, April 27, 2011 (AFP) – When British mobile phone giant Vodafone paid $11.1 billion to buy an Indian cellular operator four years ago, it had high hopes the purchase would offset saturated markets at home. “This kind of deal is what we all dreamed about when we were students,” former chief executive Arun Sarin exulted after the company bought a 67 percent controlling stake in the Indian firm then known as Hutchison Essar.

But even though Vodafone has won tens of millions of new subscribers in the hyper-competitive Indian market, it has faced innumerable problems.

“Has India been a good case in terms of return on investment?” Vodafone global chief executive Vittorio Colao said on a visit this month to the country. “Unfortunately, the answer is no.”

The Indian market soured for Vodafone, the world’s biggest mobile firm by revenues, soon after its entry.

“For sure, the market has become tougher. Within a year of our acquisition, the rules were changed and six new (national) licences were issued. New players came into the market with very aggressive pricing,” Colao said.

Vodafone had to write off $3.7 billion last year on its Indian investment after cut-throat competition among