Furthermore, though mobile penetration is relatively high in the big cities at more than 30 per cent of the population, it is less than 2 per cent in the countryside. Already it's growing at breakneck pace, which for Arun Sarin, the chief executive of Vodafone, the mobile phones Goliath, would make the country a natural target for expansion even if he wasn't Indian-born himself. The bald statistics on this market are quite staggering. India may be one of the poorest countries in the world in terms of GDP per head, but it is already the third-largest mobile phone market in Asia, behind China and Japan. India, by contrast, will have one of the youngest, which all other things being equal, will make it the boom economy of its age. Forget the charge into China; it's India where you really want to be, goes the thinking among some corporate planners. China may be growing strongly now, but thanks to past policies to discourage child birth, in 30 or 40 years' time it will have one of the most aged populations on the planet.
Mr Sarin said the company would be interested in acquiring more shares in Bharti, but Vodafone is likely to face stiff competition if it hopes to gain control of the business at some point in the future.In addition to Singapore Telecom's 30 per cent and Vodafone's 10 per cent, the Mittal family own 25 per cent of the company and the rest is a free float on the Indian stockmarket.To expand its customer base, Mr Sarin said Bharti would be looking to widen its network coverage rather than simply adopt a price cutting strategy.. "The rights we have are greater than you would expect to see from a 10 per cent shareholding."Mr Sarin said India offered huge growth potential and was an important market for Vodafone to have a position in. The Indian government recently lifted the ceiling on foreign ownership of local telecoms companies to 74 per cent. Vodafone's influence over Bharti's management will allow it to include the economic benefits of its 10 per cent stake in the accounts of the Vodafone group.Vodafone will join a rival mobile operator, Singapore Telecom, on the Bharti share register.
Singapore Telecom has accumulated a 30 per cent stake in the Indian company.Sir Julian Horn-Smith, Vodafone's deputy chief executive who negotiated the acquisition of the Bharti stake, said he had been holding talks with the chief executive of Singapore Telecom earlier this week about the relationship of the two companies."What matters are the rights as shareholders," Sir Julian said. It would also give Vodafone pre-emption rights over further share sales by Bharti's family owners, led by Sunil Bharti Mittal, who is also the chairman and managing director. This compares with mature European markets, such as the UK, where there is more than 100 per cent market penetration. In terms of customer additions, the Indian market is growing at 53.3 per cent year-on-year, although at the moment only 30 per cent of the population is covered by a mobile network.Bharti, which is valued at £8.2bn on the basis of the Vodafone deal, has a 21.8 per cent market share with 14.1 million customers and is only one of three operators with a nationwide presence on the Indian sub continent. Vodafone is to spend £820m acquiring a 10 per cent stake in India's leading mobile phone operator, continuing its strategy of seeking growth opportunities in emerging markets. Arun Sarin, the Vodafone chief executive who is Indian-born himself, announced the acquisition of the stake in Bharti Tele-Ventures yesterday while visiting the Indian Prime Minister, Manmohan Singh, in New Delhi. Vodafone is paying £460m to Warburg Pincus, the private equity group, for 5.61 per cent of Bharti and £360m to an Indian investment company for the remainder of its holding.After Nigeria, Columbia and Argentina, India is the world's fastest-growing mobile phone market, with revenues expanding at a rate of 66 per cent year-on-year, according to research by Merrill Lynch.With a population of 1.1 billion, India has just 65 million mobile phone customers, equivalent to about 6 per cent of the country.