Click to play videoMumbai: Vodafone Chief Arun Sarin has given the company three years to climb up to a number one position as number three is not his position of comfort.
Sarin's strategy is focused clearly on increasing rural subscriber base. But average revenues from these subscribers that are currently between 75 to 125 rupees a month may not be enough to maintain profitability.
Analysts say Vodafone will have to aggressively convert the high-end customer with revenues of over 500 rupees to maintain its margins. And this may not be very easy.
“One should not see the big shift in the market share. There is no reason for people to change the number. There should be a good enough reason to churn,” says partner, E&Y, Prashant Singhal.
Besides, unlike most other markets, Vodafone will have to compete with at least four telecom giants in India including Airtel, BSNL, Reliance and the Tatas.
Most of these players are very well entrenched in the market. Airtel, Reliance and BSNL already have operations across India, Hutch-Essar, Now Vodafone is present only in 18 circles.
“Since it is present in all 23 circles to relocate that network and subscriber base, Vodafone will take time to catch up,” says research analyst, Angel Broking, Harit Shah.
Airtel, Reliance, Tata are all household brands in India with high recognition and brand equity. And Vodafone will be a brand new name in India especially in the rural areas that is Vodafone's target market.
Analysts say that unless Vodafone can offer a very attractive proposition not only in terms of tariff plans but also in the form of better network quality, customer interface system and innovative value added services, displacing any of these big players could be a long call.
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