‘Data Consumption Is Picking Up Fast And We Are Gearing Up For It’
Sunil Sood is in charge of turning a new chapter in the pages of Vodafone India. Even as the company is gearing up for a merger with Idea, the CEO & MD has been overseeing the launch of enterprise and 4G. At the same time, Sood is ensuring that the second largest player in the telecom industry continues to keep the competitive intensity going. In a conversation with Clifford Alvares, Sood dwells on the new challenges in the telecom sector, and how the company is gearing up for the change.
Edited excerpts:
Q: How do you see the telecom industry shaping up globally and domestically?
Both globally as well as in India, telecom is at a very interesting cusp. Today, half the world uses a smart phone and two-thirds uses a mobile phone. That’s a huge number. No other consumer durable has such a high penetration.
Telecom is also one of the most futuristic industries. The need for communication whether via voice or data is growing fast. If India needs to emerge in the near future as a global power, then it is essential that the telecom sector does well and is seen as a growth enabler for other industries. All the emerging technologies and platforms like digital, artificial intelligence, robotics, IoT, cloud, analytics, etc., are dependent for their success, on a sound telecom network. The startup industry, too, relies on connectivity to provide most services.
Q: What are the trends you are spotting in India in terms of change?
The business is rapidly evolving from just voice to voice and data. Globally Vodafone has launched 4G some years ago. Today, Vodafone offers 4G services in over 20 countries. Internationally, we are also leaders in IoT and have over 50 million SIMs running on this technology. With the Vodafone Group knowledge, we bring in our global learnings and experiences to rollout new age products and services faster.
Overall, data constitutes over 33 percent of Vodafone revenues. In India, it is just over 20 per cent, while voice is around 80 per cent. Data continues to rise. We are gearing up for that.
We have graduated from just providing connectivity to total business solutions for enterprise customers in line with global trends. There is an increasing demand for futuristic products like digital, Cloud, IOT, security, analytics etc. In this, India is still a few years behind the developed world, but is catching up fast.
Q: The telecom sector is now seeing huge competition. How do you see this impacting your business?
While the prices are falling for data and voice, at the same time there are some positives in the industry too. The industry is consolidating at a fast pace. We are merging with Idea, and others telcos are merging as well. Ultimately, there will be four-five players. In the future, hopefully this will give the industry a better pricing power even as customers continue to have enough choice.
There is SIM consolidation happening in the market. Earlier customers had two SIMs in their dual SIM mobile, so ARPUs were split between the two SIMs. Now, with integrated data and voice plans bundled together, it doesn’t make any sense for customers to use two SIMs. So, the customer has to choose his service provider.
Q: What is the impact of falling tariffs on your business?
This is an industry that is used to dropping prices. For the last 20-plus years, mobile service prices have only gone one way: south. Only thing is, that this is happening far more rapidly. The price fall has been steep. Now, the fall is flattening out, but Telecom usage has gone up, and that is good for the industry and the customer.
Q: The merger with Idea is also about cost synergies. How is it progressing?
The merger will completely change our P&L. We get huge amount of synergies, which is equivalent to about $10 billion over the long-term. We will have approximately $2 billion worth of synergies in the first years of the merger, per year. Ultimately, the network comprises of nearly 70 per cent of our costs. Together, Idea and Vodafone have about 270,000 sites. Once we optimise these, there will be huge synergies.
Second, today as two separate companies, we are duplicating almost all our efforts in the marketplace. When we combine, we will double the amount of spectrum we possess. Larger spectrum frequencies increases capacity of a site significantly.
Q: What are the other digital consumer initiatives you have started?
We launched Vodafone Play, which we have upgraded to 300 live TV channels and 20,000 movie titles. Currently, it is free, but we will start monetising it in the future.
Q: How are your other businesses such as enterprise and fintech shaping up? Isn’t that prone to competitive forces like the consumer sector?
In India, we started investing in building a comprehensive enterprise business about five years ago. Globally we address our enterprise customers through our Vodafone Global enterprise team. Enterprise customers and MNCs can get global account management services as we are present in more than 45 countries either directly through the Vodafone brand or through partner telecom companies.
Our enterprise business in India is growing in double digits, and at a much faster pace than the market.
We have also invested in our fintech business, mPesa, where we do approximately Rs 900 crore worth of transactions a month. mPesa is used for Direct Benefit Transfer, microfinance payments, money transfers from urban to rural. We are seeing a good traction for this business.
Q: You have made a recent acquisition in India. How does it fit your business strategy in India?
We have recently bought You Broadband, a specialist broadband-to-home company. It already has about 2 lakh customers, and is present in 11 cities. This gives us a good base from which we can explore opportunities for convergence and bundling. We already have a good fixed line business on the enterprise side. With You Broadband, we now have fixed line broadband assets on the retail side as well.
The enterprise, mPesa and You Broadband businesses are growing in double digits. These businesses are enabling us to be fit for the future, over and above our traditional voice and data services.
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