Presentation on article of Vodafone.

Source.Business India

Connecting to Bharat.

• At near 8000 Vodafone Laal dukhans are there in Rural places pan.

• Vodafone CEO Marten Pieters visited one of these shop first time on a rural journey & with the bottom of heart & great hospitality shown by the villagers.

• Marten asked the villagers that, what Vodafone has brought you?

• And immediate reply was unexpected

• Villagers told him, we come here to sit on that chair. It cost around Rs. 3000. there has never been a more expensive furniture in the entire village. That gave Marten a new perspective on the meaning of hot seat.

• Mr. Marten does not get time to sit on his own chair, perhaps he is busier than the telecom chiefs because he has an additional mandate-to take Vodafone India to Public issue.

• Postponing the issues does not mean that Marten get time for rest, “to Indianise Vodafone ,” in 10 years, Marten want be seen as a HUL. Whatever be the ownership, but Marten want see Vodafone as Indian Company.

• Some transactions are easy. When Vodafone brought 67% stake in hutchison Essar for $ 10.7 billion in 2007.

• Cheeka the pug – simply moved from pink kennel to a red one.

• That message was there in the ads, Internally, it was not the simple. The main aim was to change the mindset of the customers.

Stairway the heartland: En route to an IPO

• India’s figures are high in Vodafone Plc. Scheme of thing. The Company has invested more than Rs. 50000 crore in the past 5 years.

Capital Expenditure

2010 - 6550 crore2011 - 6160 crore2012 – 6220 crore

• Vodafone & ICICI bank are reaching out to the unbanked mobile payment system M-pesa. This was flagged off in November this year & uses the technology & experience of Vodafone in Kenya.

Subscriber (Million)

Vodafone Total Rural Rural as % of total

Mar. 2009 68.8% 15.1 21.9

Mar. 2010 100.9 36.8 36.5

Mar. 2011 134.6 15.6 11.6

Mar. 2012 150.5 62.8 41.7

Sep. 2012 152.7 72.9 47.7

• The percentage of rural subscribers is going up as Vodafone starts to focus on the heartland.

• There are smaller initiatives like Nokia Life Tools, which disseminates information on AGRICULTURE, HEALTHCARE, EDUCATION, & ENTERTAINMENT to Farmer.

• Vodafone has been painting rural India red with its Laal Dukaans, small retail outlets in Vodafone Colour.

• Vodafone India has 8 entities in its fold. Some of these have their origin in earlier acquisition. They are being amalgamated into one entity to make it IPO ready.

• Vodafone has tied up with state Governments for projects such as E-Mamata, a mother-and-child tracking system in Gujrat.

• In Feb. 2012, Anjit Singh was appointed non-executive Chairman. The Company has not had a Chairman in its Vodafone Avatar.

• Pieters says “they are selling it for strategic reasons.

• Internal change is always needed before external change. The trouble with Hutch, as mentioned earlier, was that it went after revenues, not reach. This shaped internal attitudes. The big-buck user was preferred to building up a substantial subscriber base.

Mass Appeal

• The attitude filtered down to retailers. “the shop keeper would say this (Vodafone) is not for you.” remembers sood.” this is for the classes, not for the masses.” in fairness to Hutchison Essar–the AVATAR of the Company – the change begun before Vodafone take over. After the entry of UK-based multinational, however, it gathered momentum

• Vodafone had to change the attitude at the retail outlets. More importantly, it had to coach its own people.

• In 2007 Vodafone went to the Slums with the special promotions & packages. “the poorer people the more they need the mobile phones,” says Pieters.

• Going rural was natural extension of the reach-the-masses thinking process. Bharati Airtel had already stolen a March in Rural India, so Vodafone had to do the things differently.

• Its Major Learning came from BSNL which has been setting up towers across the country as part of Government’s Communication drive.

• The Rural towers gave the confidence that the Company would not run away overnight.

• Company came up with the idea of Laal Dukaan, a small village shop set up for Rs. 30000 to service its customers.

• Vodafone’s other deviation from Bharati model was roping in sons of the soil as associates distributors.

• Vodafone also went down a different road in selecting where to locate the FMCG companies look at various socio-economic criteria; if you have a TV. Set, your next stop will be telephone. In this case the only criterion was population. Shops were put up where they could service a catchment of 1000 customers

Changing customers

Customer needs have changed. Today, they ask about downloads & data speed. With 3G spreading , Information requests will get even more technical. “The language of our customer is changing,” say Sood.

New Directions

• The other rural innovation – which may be the wrong word because everybody seems to have got the same idea at the same time – is the Chota Recharge. It costs Rs. 10. (Airtel has gone up with a Use pack at Rs. 5) I operates on the same principle as the sachet. & it works. People buy talk time when they have money. In a state, people recharge their A/C 4 to 6 times in a month. & in the Rural places it may go more than 10 times.

Metro focus.

• The business service began as metro-centric activity, the focus being on Vodafone’s Global client & the Indian Corporates. Now that low hanging fruit has been plucked. There is still a huge market there, but it has to be fought for.

• This is basically B2B. Says Chopra. “when we talk to companies, that is where I come in.” the vertical for the Govt. & the Public sector is being set up right now.

• Vodafone I focusing on top 100000 there are 4.2 million SMEs in the country, so this is the tip of the ice-berg. “But it means a big change in the way we work,” says Chopra. & he said

• We used to target 10000 large corporates. Now our market has increased by a factor of 10.”

• Many of SMES are in Bunty-aur-Bubbly territory – the smaller cities. “We believe they are completely undeserved,” adds Chopra. Like Project Pappu, Vodafone Business Solution is making inroad into the heartland

• All these plans developed on one factor: the availability of talent. Pieters says top talent is hard to Come by. You need people with 15-20 years.

• Some amount of talent is exported to other Vodafone countries. But the Indian operations have an advantage (which could look like disadvantage). By its very nature, Vodafone India’s operations are restricted to India. It is something like IBM. India going after domestic market, while IT stars like Wipro, & Infosys prefer to chase $.

• A Company like Bharati want to be global player. For its major takeover – such as Zain in Africa – it has to second some Indian talent to that unit.. This could impact management brand width here.