Vodafone Management Views - Spectrum + Rate Hike + 3G

[sunilk_007]

They noted that the market and operators are focusing very much on 2G spectrum auctions now, and Vodafone doesn’t expect high prices but also doesn’t expect the regulator/ government to set low reserve prices either, especially for metros as there isn’t much difference between the 900Mhz and 1800Mhz network. They do not see any merit or believe the 'one-off spectrum charge' over 6.2Mhz can be levied retrospectively. These will be appealed in the Supreme Court.

Management is optimistic about further price hikes, but this is unlikely to happen in the near term. It also said that if it was to happen, it could take prices from 1.2p to 1.5p. Even Bharti's ROCE is 9% and hardly anyone else is making any returns when cost of capital is 10-11%.

They also expect the 3G operators to be allowed to roam onto each other’s networks (licences are now UASL licences) as that's what was decided/ understood before the auctions. They expect data take-up to be 2-3 years away – India is predominately a voice market still; hence, ARPU uplift scope is limited for now.

[admin]

Vodafone PLC Management Positive on India

Vodafone continues to see substantial growth opportunities in India where market penetration offers significant room for incremental growth and Vodafone is gaining c.1% additional share every year. The pricing environment is getting better and the margin prospective is also encouraging. Vodafone expects its increased scale in India to deliver margin expansion from the mid-twenties to the high-twenties over the medium term. The operator is number 1 or 2 in 12 circles with good margins and is improving its negative margins on c.7 circles with increasing shares. Vodafone sees the spectrum re-auction as a positive but notes that the process will take one year at the very least.