Vodafone profits in India, pushes value of mobile in emerging markets

Vodafone Essar reported an annual profit for the first time in four years on the back of a 134 per cent jump in operating profits. At the same time, Vodafone is increasing pressure on the Indian government to support mobile as the primary form of broadband connectivity.

Vodafone Essar posted profits of €15 million for the 12 months ending March 31, compared with a loss of €37 million during the year-ago period. This is very positive news for Vodafone which has agreed to pay $5 billion (€3.51 billion) in cash for the Essar Group's one-third stake to take complete ownership of the Indian entity.

Vodafone is also building pressure on the Indian government with the 2011 Social Impact of Mobiles report that it co-produces with the World Wide Web Foundation.

In a thinly disguised attempt to influence the Indian government, the report suggests that the most effective way to provide affordable Internet access to the majority of people in emerging economies is to extend the reach and capability of mobile networks.

The Indian states of Maharashtra, Karnataka and Rajasthan were chosen for a comparison of fixed and mobile rollout costs. The report concludes that the deployment of a fibre access network would only be commercially viable in 3 percent of the districts. On the other hand, it is commercially viable to provide wireless broadband coverage to 98 per cent of the districts, it claims.

The report suggests that governments should provide mobile-enabled services free of charge in order to increase broadband take up. This is based on the social and economic value of internet connectivity as World Wide Web Foundation CEO Steve Bratt explains in a statement: "Social networking has huge potential to act as a platform for e-government applications accessible via mobile handset devices. We hope regulators allow innovations in this area to flourish and not inhibit them by preconceived notions of the right model or pricing".

Finally, the report recommends that regulators should focus on consumer welfare when making spectrum available for service providers as the availability of spectrum will drive technology innovations and better coverage for the growing demand for mobile broadband services. Tapping spectrum as a source of short-term government revenue costs the economy billions more in lost economic value.

Vodafone, like all India's operators suffered from a protracted and expensive 3G auction process and the report suggests that report claims that the delays in the 3G auction in India cost the country over $22 billion (€15.48 billion) per year in lost economic growth, compared to the economic benefit of $500 million (€352 million) per year.

For more:
- see this India Business Standard article
- see this Economic Times article
- see this Vodafone release
- see this Vodafone SIM report

Related Articles:
Vodafone mulls Indian IPO, but only if local issues get resolved
Vodafone plans IPO following $5bn deal with Essar on Indian JV
Rumour mill: Vodafone schemes buy-out of Indian partner
Vodafone Essar accused of price fixing in India
What now for Vodafone's potential cash mountain?

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