The year 2013 was a busy one for Vodafone India. The company focused on enhancing its data service portfolio and expanding the scope of its financial inclusion and rural initiatives. Marten Pieters, managing director and chief executive officer (CEO), Vodafone India, talks about the company’s performance over the last year and the plans for 2014…

How has Vodafone India performed in 2013? What were its key achievements during the year?

The year 2013 was a satisfactory one for the company. We focused on some key themes that we had identified and achieved our goals.

Data

The initiatives that have been taken in this space include:

•New pricing for greater adoption of data, including reducing rates by 80 per cent for pay-as-you-go users

•A strategic tie-up with Twitter to provide customers free access to the service for 90 days

•Mobile internet buses to educate people about the power of mobile internet.

Financial inclusion

We launched M-Pesa, our flagship product, to cover more people under our financial inclusion initiatives. Currently, this service is available in 12 states and there are over 30,000 authorised agents for providing it. We are looking at pan-Indian coverage in the coming quarters.

Rural initiatives

In the last auction, we were the only company to successfully bid for spectrum in smaller circles. This was done with a view to ensure that we could offer superior services in the farthest corners of India. Today, of the total 158 million subscribers, almost 60 per cent are from rural India, which clearly shows the success of the initiative.

Mobiles for good

In the true sense, a responsible business is good for the people, good for the environment and good for shareholders. Keeping this in mind, we launched Vodafone Cares, a platform to encourage the organisation and our employees to undertake more focused and bigger initiatives that benefit the community under the themes of education, empowerment and environment.

What trends do you foresee in the sector?

I believe that the telecom sector will witness some consolidation after the upcoming round of spectrum auctions. We will also see a more “connected” India, with more and more people discovering the internet experience for the first time. Another significant trend would be the penetration of services in untapped rural markets. Prices will stabilise as all operators gradually scale back on the “freebies” being offered. I also expect a significant improvement in the overall customer experience, with greater technology deployment. From Vodafone’s perspective, we welcome the relaxation in foreign direct investment (FDI) rules and will increase our stake in our Indian company to 100 per cent in the near future.

What is your view on the current policy and regulatory environment?

The year 2013 saw the first attempts by regulatory bodies to get the sector back on track as a change agent for the economy, after many years of uncertainty post the 2G licence issue. Nevertheless, there are still some issues, but I am hopeful that the regulators will take cognisance of the contributions made by the sector in the past 20 years and take a longer-term view of it, rather than looking at it as a revenue generator to bridge deficits.

Meanwhile, recent announcements by the Telecom Regulatory Authority of India (TRAI) have been very positive and we welcome them. Vodafone has always been a long-term player in each of the markets it operates in globally. We are committed to India as is visible in the total investments we have made since entering the market in September 2006. We have invested over Rs 560 billion and have paid the exchequer over Rs 550 billion. This commitment will continue. We will maintain annual investments of Rs 40 billion-Rs 60 billion in India in the foreseeable future. Today, India and Germany are the two most important markets for the Vodafone Group.

What has been the response to Vodafone’s data services? What initiatives have been taken by the company to encourage 3G service adoption?

The response has been excellent. We witnessed exponential data growth last year. As of September 30, 2013, data browsing revenues stood at Rs 15,419 million – up by 76.5 per cent. About 155.5 million subscribers, comprising 27.3 per cent of total customers, use data. Customer education is key to wide adoption of mobile internet; hence, we conceptualised and executed a very unique campaign, the Vodafone Mobile Internet Bus. Five buses equipped with five smartphones each travelled 130 cities (Tier II and Tier III) in West Bengal, Uttar Pradesh, Maharashtra, Gujarat and Tamil Nadu over a span of three months.

What are some of the green initiatives taken by Vodafone India?

Our journey towards a greener environment in India started in 2008 with the identification of energy saving opportunities like site sharing and taking appropriate measures to reduce emissions. Since then, we have expedited energy efficiency measures across our network including our data centres, switches and IT infrastructure.

We were the first telecom company in India to voluntarily publish a sustainability report, “Footprints”, in 2011. Also, we became the first telecom company to print it in 2012 in the digital accessible information system format for the print disabled. And in 2013, we became the first telecom company in India to publish its sustainability report based on the recently introduced Global Reporting Initiative’s G4 guidelines.

Under the Vodafone Cares platform, we recently entered into a strategic partnership with The Energy and Resources Institute (TERI). TERI will advise us on ensuring sustainability in our business and operations; and provide support for mapping Vodafone India’s carbon footprint and conserving energy.

Our main approach to going green is to reduce energy demand and improve energy efficiency by deploying various efficient solutions and renewable energy technologies (like solar energy). The majority of our base stations (89 per cent) are co-located along with other operators’ base stations at third-party tower company sites, leading to lower electricity and diesel consumption.

A “fast forward” initiative with the objective of reducing wastage and enhancing efficiency was started in the first quarter of 2011. In the networks domain, a 14-member dedicated team representing various circles worked for three months to identify problem areas and workable and implementable projects. The team identified 20 projects and 50 solutions, which included reduction in diesel consumption and prevention of diesel theft.

What are the company’s targets  for the fixed line services segment?

Vodafone Business Services started its journey in the wireline services space a little over three years ago. Enterprise data and voice connectivity on fixed line networks is the heart of any enterprise network.

For 2014, we have set some very ambitious targets for this business and are confident that we will achieve them. We have the network reach, products, systems, service support and, above all, the people to make this happen.

What initiatives are being taken to improve service delivery in rural areas?

We have been focusing on rural India in the past few years. These regions now account for about 60 per cent of our subscriber base.

We have been successful in connecting and empowering millions of rural customers by strengthening our distribution and increasing service reach, which make us an operator of choice in rural India.

We have set up the Associated Distributor Vodafone Mini Store (ADVMS), commonly called Laal Dukaan, in rural India. Today, we have around 5,500 ADVMSs across the country.

We have launched the M-Pesa service in rural India. M-Pesa agent network penetration in rural areas is 87 per cent as compared to 23 per cent for all bank branches put together.

What are the key challenges facing Vodafone India? What measures are being taken to overcome them?

Many challenges are being faced by the industry and not necessarily Vodafone India. A major challenge will continue to be the regulatory environment, as well as issues related to availability of spectrum, licence extension, spectrum refarming and 3G roaming. There also needs to be long-term policy clarity to help the sector recover fully.

Laws supporting consolidation need to be put into place – most markets have three or four players and are effectively competitive. However, 8-10 players in a market do not guarantee healthy competition but just price wars. Broad directional statements were recently made by the government, which is encouraging; however, we are waiting for the final policy.

In order to ensure a level playing field, there needs to be a single-window approach on policy issues related to telecom towers and right of way. On the much debated subject of electromagnetic field norms, the government needs to step up efforts to educate the public at large on the safety aspect.

We also expect rationalisation of the burden of duties and levies being imposed on the sector.

An enabling framework for improving rural service roll-out and enhancing broadband access needs to be provided.

Constant dialogue with the regulators is the way forward.

What are the company’s growth and investment plans for 2014?

India is an important market for Vodafone. As of September 30, 2013, Vodafone India was the third largest contributor to group service revenues. We see major opportunities in the Indian market and will continue to invest and expand our business. Our global CEO, Vittorio Colao, visited India in December 2013 and spoke about this market’s importance for Vodafone globally.

We see significant potential in mobile banking to reach out to customers in Tier II and Tier III cities, which have an unbanked population of 450 million.