Thursday, February 24, 2011

Vodafone To enter landline business

24 Feb, 2011,MUMBAI:

Vodafone Essar plans to enter the leased landline and business solutions space, competing with larger peers Bharti Airtel, Reliance Communications and Tata Communications .

"We are a late entrant in the business, but that puts us in an advantageous position of nothing to lose," said Naveen Chopra, Director – Enterprise and Carrier Business at a conference on Wednesday. Vodafone's entry may intensify price wars in the enterprise business, just like new entrants in the mobile telephony space did since late 2008.

With retail customer tariffs down to one paisa per second, enterprise business present high margin data revenue for telecom operators. Unlike mobile telephone call rate that have halved over the last two years, telephony solutions for enterprises have been falling 10-15 % every year.

"We cannot pretend that there will be no pricing impact, but the volume growth in the enterprise business more than adequately compensates the fall," Mr Chopra said. Over a span of five years Vodafone Essar expects trebling of revenue from the segment, which currently accounts for 8-10 % of the company's revenue at the moment, he said.

By the financial year that will end in March of 2016 enterprise business would account for nearly 20% of the company's revenue. In the October-December quarter revenue of Vodafone Essar was approximately 7,126 crore, the UK-based parent Vodafone Group had said. It does not disclose the profitability of the region. It will also give preference to enterprise customers on its 3G services to be launched before March-end.

The company bought 3G airwaves in nine service areas for 11,618 crore in a government auction last year. The service is expected to bring more profit-making data business to telecom operators.
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