For Vodafone India, growth comes from rural markets

Mumbai: With the urban subscriber base for voice services plateauing, growth for Vodafone India is coming in from the rural parts of the country.

The GSM operator has now emerged as the largest telecom operator in rural India, by amassing a total rural subscriber base of 82.24 million (as of March 31).

This compares with that of the country’s largest telecom operator Bharti Airtel, where rural subscribers stood at 82.16 million, according to Cellular Operators’ Association of India (COAI) data.

“…we are looking at rural customers with lot more practicality than that compared with our competitors. Just because he is a rural customer does not mean that you can sell something outside of his interest area,” Vodafone India Chief Operating Officer Sunil Sood said. The company has rolled out an array of initiatives such as its Associated Distributor Vodafone Mini Stores (ADVMS) to get a foothold in the rural market. ADVMS, commonly referred in rural India as laal dukaan (red stores), are touch points managed generally by a resident of the area, such as someone from the Panchayat.

5,500 ADVMS

At present, Vodafone India — the Indian unit of British telecom major Vodafone — has about 5,500 ADVMS across the country, out of a total of 7,800 exclusive retail stores.

The GSM operator also uses satellite maps, super-imposed over census data, to allocate sites for ADVMS.

“This initiative, coupled with the usual ‘hub-and-spoke model’ (a system of links arranged similarly to that in a chariot wheel) paid dividends,” Sood added.

Moreover, Vodafone India’s association with ICICI Bank for M-pesa is also helping it make inroads into the rural sector. M-pesa, a financial inclusion initiative, has been launched in Kolkata, West Bengal, Bihar and Jharkhand, and is slated to be rolled out to other parts of the country in the next 12-18 months.

However, Bharti Airtel, continues to be the country’s leading mobile operator with it garnering a total of 188.20 million users. Vodafone India’s total user base stood at 153 million as of March 31.

“In the ‘A’ and Metro circles (urban circles), tele-density is high, reaching as high as 140-150 per cent in certain circles. This would make it difficult to add subscribers in these regions, while that in rural circles are below 50 per cent,” said Ankita Somani, Research Analyst (IT and Telecom) at Angel Broking.

“So, the next phase of growth will come in from the rural sector,” she added.

Rural is basically ‘B’ and ‘C’ circles, while ‘A’ and metros are considered urban region. Tele-density is calculated as telephones per 100 people.

“Potentially, the rural market is yet to be tapped. I won’t say these rural forays will translate into average revenue per users (ARPUs), but these are additional source of revenues, not to mention subscriber growth,” Gartner Principal Research Analyst Rishi Tejpal said, adding, this would also mean more network resources.

“If you look at our rural initiatives and tie it to our overall strategy, we can leapfrog others in this area. Can it be the next big thing for us?” Vodafone India’s Sood said, adding, “We believe so.”