Vodafone to trigger tariff war

New Delhi: With CEO Arun Sarin saying it would provide cheaper call rates and better handsets to customers, UK telecom giant Vodafone's entry into the Indian market is expected to fuel competition in the mobile tariff space, besides the handset market.

Vodafone may bring China-made low cost mobile handsets in the country under its own brand later this year through its agreement with China's ZTE.

This could start a further price war among the mobile companies, with each of them vying to have the top position in the Indian market.

British telecom giant Vodafone entered the Indian market – the world's fastest growing telecom market by clinching a deal to acquire India's fourth-largest mobile operator Hutch Essar.

Indian telecommunication market is expected to grow to 500 million mobile users by 2010 from 150 million at present.

Bharti Airtel is currently the market leader with over 33 million subscribers, compared to Hucth-Essar's 24.4 million.

"This (Hutch-Essar) is the biggest company in the Vodafone group in terms of subscriber base," as quoted by PTI, Sarin said, commenting on Hutch-Essar.

Sarin also announced an investment of $2 billion over the next couple of years to expand Hutch-Essar reach in rural India and said he now intends to make Hutch-Essar the country's number one player with a target of 100 million customers.

The competition would ultimately benefit end users as the companies are likely to come out with attractive and cheaper offers to retain and add new subscribers.

India-born Sarin said customers can look forward to cheaper call rates, better handsets and value-added services like banking and money transfer once it enters the country.

Bharti Airtel Chief Sunil Mittal had said his company too was determined to maintain its numero uno position, while saying that Hutch can be number two.

Vodafone had yesterday announced a handset procurement agreement with ZTE, under which the Chinese firm would produce a range of Vodafone-branded low cost handsets for sale across various markets.

The UK giant is targeting emerging markets in particular for sale of these handsets by the second quarter of 2007.