Vodafone’s Colao accuses Jio of ‘posturing’ over $15bn interconnect claim

By:
James Pearce
Published on:

Vodafone group CEO Vittorio Colao has dismissed Reliance Jio’s claims that the established telcos in India generated $15bn due to inflated prices and a lack of regulation

Vodafone CEO Vittorio Colao has slammed Reliance Jio claims that established operators in India have generated over $15 billion due to inflated prices.

In the latest in a long-running war of words between Indian operators, Mukesh Ambani’s Jio, which launched in September 2016, reportedly told Indian regulators that the failure to bring down prices in the country in 2011 had given the likes of Vodafone, Bharti Airtel and Idea Cellular bumper profits.

Citing people briefed on the matter, Financial Times (FT) reported representatives from Jio argued the point with the Telecoms Regulatory Authority of India (TRAI) at a meeting of operators this week, in which the aim was to discuss the cost of interconnect calls on other networks.

Speaking to journalists following the publication of Vodafone’s latest financial results, Colao accused Jio of “posturing”, saying telcos in the country had taken mobile phone coverage to “very rural areas”.

“This issue is very self-serving for Jio,” Colao added. “Let’s look at the reality – we built local networks in rural and porr areas where a lot of people have been able to receive phone calls because we built them. The claim that we have benefitted from this is ludicrous because there would have been no service in certain areas without incoming calls, and incoming calls was the only way to invest in those areas. It is part of the usual posturing of the newcomer and we will push back on those allegations.

“It is important in general to preserve some incentive to build networks in areas where there is not a lot of economic activity but a lot of people need to be connected. Incoming calls is one way is to make sure people who have less money still have good mobile access. The Jio battle is very self-serving and we don’t take the arguments very seriously.”

India has proven a tough market for Vodafone and its competitors since the launch of Jio last year, with the newcomer aggressively offering free 4G packages that have undercut its rivals. This has led Vodafone to agree to a merger with third placed player Idea Cellular, that will see the combined entity leapfrog market leader Bharti Airtel to become the country’s biggest mobile operator.

Colao said the merger, agreed in March, has now been filed with Sebi and the Competition Commission, but is “on track.

Better results elsewhere

In its Q1 results, which ran up to June 30, Vodafone service revenue in India fall by 13.9% to €1.3 billion, which it blamed on continued price competition from the Jio and its other rivals. This is despite the fact that the operator added 2.9 million customers during the quarter.

Overall, it was a positive quarter for Vodafone, with service revenue up 2.2% to £11.5 billion, and growth reported across all operations except India and the UK, where sales fell 2.7%.

“We have made a good start to the year in Europe, where our commercial momentum remains robust, and growth accelerated across AMAP,” Colao added. “Although competition in India remains intense, service revenues stabilised compared with the prior quarter. 

“Our substantial investments in network leadership, an excellent customer experience and even greater ‘more-for-more’ propositions for customers are enabling us to monetise strong demand for mobile data. We are gaining profitable market share in broadband, and a growing proportion of our customers now take our fully converged offers. Our world-leading Internet of Things platform contributed to another quarter of solid growth in Enterprise.”