Aim to resolve call drop issue with govt via dialogue: Voda

Sood said telcos also need to work with various other stakeholders such as some parts of resident associations and municipalities in order to increase the number of towers, especially Lutyens Delhi area — to enable companies (telcos) to construct towers in these places.

There has also been a lot of talk on whether telcos may ultimately have to take the legal route to resolve the issue. "Moving courts will be COAI and Auspi's decision," Sood added.

Moving on to the topic of IPO, Sood refused to give a specific timeline, but said: "Lot of work needs to be done for an IPO. At the moment, the Board has asked us to start preparing for an IPO. But the timing will depend of various factors such as market environment, among others."

Below is the verbatim transcript of the interview..Q: The one topical issue that you know I am going to ask you about is the call drop issue. That has both the industry, both the regulator as well individual telecom operators worried. From where you are standing Rs 54,000 crore from an industry point of view is the likely damage. Have you been able to or have you started to quantify how fat the damage will be as far as Vodafone is concerned and what could be the road ahead if at all there is a compensation clause added for your customers for call drops?A: First of all as an industry we believe that we need to work with the minister as well as the regulator to resolve what he wants to do with this regulation. We have appealed to him to reconsider the regulation to the Telecom Regulatory Authority of India (TRAI) Chairman. We have also written a letter to the minister asking for a dialogue. We are waiting for the reply. So, we believe there is hope yet. Things can be resolved with the various stakeholders vis-à-vis a dialogue and we look at this whole call drop thing firstly that we need to work as Vodafone as a company to offer better services to our customers and we need to work with the various stakeholders in this area and there are various stakeholders which we are working with which includes the government and which includes municipalities, which includes also some parts of the residents associations etc which affect sites.So, the ministers offered us help in terms of getting us more towers in terms of getting us more towers specially in Delhi for the Lutyens Delhi area where we have huge gaps in terms of requirements for towers and requirements for coverage and he has offered the industry some helping enabling us to get sites in these government buildings which I consider a great help. He has also publically gone on TV to register that electromagnetic field (EMF) is a superstition and there is no real health hazard for individuals from cell sites. I consider that also - for the first time we have had somebody from the government on national television siding with us. That is a big support he has given us. So, we believe that similar to that we need to work with him and with some of the other stakeholders in resolving this issue on this legislation as well as delivering better service to our customers.Q: Since you mentioned telecom minister the last time he spoke to media channel and addressed journalists on the sidelines of one of their briefings they seemed to be fairly certain that they are not removing the compensation clause that customer comes before. What are the kind of mid ground that you can reach and by the looks of it the compensation order is unlikely to be removed right now.A: You are speculating. For us we are trying to do a dialogue with the minister and with the government to try and resolve it for mutual benefit both their objectives as well as our objectives as well as the customers' objectives should be met. So, let us wait and see. Let us not speculate on what is going to happen in the future.Q: The one question that everyone is asking Cellular Operators Association of India (COAI) is will moving the courts for this, should then be no kind of mid ground that is reached with TRAI and the telecom ministers. In that case would that be an option moving the courts?A: That is a COAI and Association of Unified Telecom Service Providers of India (AUSPI) decision of what they would want to do but at this stage what we are saying is we would rather have a dialogue to dissolve it with a a consensus.Q: Have you got any kind of clarity as far as TRAI is concerned if they are willing to at least look into or withdraw the order?A: As of now we don't have.Q: The much awaited question is as far as Initial Public Offering (IPO) is concerned Mr Colao just a few days ago indicated and I am quoting here that 'they are preparing for an IPO'. So, I won't go into details but give me a sense. We have been waiting for this for 5-7 years now. So, in the next say, 2-3 years would that be a fair enough timeline to say that Vodafone will be ready to list in     India?A: I can't say yes. It is like Mr Colao says, we have been told by the board to start preparing and there are lots of work to be done before you can announce an IPO and physically go for an IPO. There is a lot of accounting, there is a lot of restatement etc. So, we have been asked by the board to start preparing for the IPO and that is the work we have immediately kicked off. Whether the IPO and when it happens depends on circumstances and what is the marketing values of TELCOs and what they expect to get, it depends on the environment at that stage. So, I can't really predict the future. But as of now what is definite is we have been asked by our global board to start preparing for the IPO.Q: I want to understand, because this is something that investors have waited for quite some time now. One year, two years, three years - is three years too wide a timeframe, would it be within that?A: It is a global board decision. Like I said, they haven't told us go for the IPO. They have said start the work and the preparatory work needs to be done and when you are ready please let us know. Q: However this time IPO is something that you are seriously looking at? The last time there was an IPO, conditions weren't right.A: I don't think we have ever publicly announced that we are preparing for an IPO. Have we?Q: Yes, about two-three years ago was when there was some kind of an indication that yes we are looking at an IPO but for now you may probably put a stop to it given the market conditions.A: Yes, so, that is why I said, we have never announced that we are preparing for an IPO. Q: So you are more serious as far as listing is concerned in the near future. Can we say near future? A: I can't say what the future foretells but I can tell you what the board has told us. They have not yet given us the go ahead to do an IPO. They have given us the go ahead to prepare and start the work and the preparation which in any market in the world whether it is India or elsewhere, it takes at least a year plus before you can actually go for an IPO. Q: Let me ask you in that case about the financial inclusion driver. Vodafone has been very active as far as m-pesa is concerned. However, right now with payment banks, you have about 1.5 years to start launching. Give me a sense about the kind of capital expenditure, the kind of ground work and the kind of leg-up that you are expecting from your payment banks foray? A: We have been very focused as company on financial inclusion and in many ways by launching m-pesa as a service we have got a kick-start in that area. We already have just under 100,000 payment points, in a sense ATMs or agents where you can cash-in or cash-out your e-money from your phone, whether you want to load money on your phone or whether you want to cash-out from your phone. These are like mini ATMs available at 100,000 points across the country. 60 percent of our business on money transfer business and about 30-35 percent of our money is being used for e-commerce or for paying utility bills, etc if you look at the breakup of what the m-pesa business is all about. Now, with the payment bank coming in, a lot more new businesses can be enabled which allow regulatory vice one of them being international remittances for example. So, we can work on that area. Our objective is basically to partner with various providers and give the best services to our customers and this could be in the insurance area, this could be in the microfinance area, etc and other products as the banking products which are there. So, we will partner with various providers and it could be different ones for different products but give our customers the best and that is what our customers expect from us and that is what our plan is. Q: The last time we spoke, you had said that you are talking to prospective banks and prospective financial players to probably look at partnering. I want to understand in terms of a stake dilution, in terms of bringing in equity partner is that on the anvil or are you comfortable to be able to venture into payment bank on your own? A: We haven't talked about any partnerships in terms of stakes with anybody yet publicly. Q: Is that an option, are you looking at binging a banking partner on board?A: We haven't made any public comments in this area. Q: Vodafone's India debt is currently about Rs 76,000 crore, slightly ahead of that. As you said Vodafone has been one of the largest foreign direct investors (FDI) investors in the country. A: We are not one of the largest, we are the largest FDI investor, we are the largest MNC investor, and we have invested Rs 111,000 crore in this country and more than Rs 100,000 crore has been given to the government exchequer.Q: Currently where do you stand in terms of your books? Is there a larger investment that is likely to come in? Or the amount that the group was investing in the Indian operation, is that done and are you at a fairly footing when it comes to your overall balance sheet?A: I do not want to comment on our balance sheet because that is futuristic and it is bound to keep on changing depending on our requirements of cash and funds, and depending on what happens, and what are the options, what are the ways of acquiring spectrum, the kind of investments that we are making in the future. But, as of now like we mentioned in the investor call is that we have invested last year about Rs 8,500 crore in terms of capex in this country. We expect to invest similar amounts in this country in this year itself and we believe that is sufficient for the needs of this country, for our subscriber base and for our ambitions at this stage.Q: Rs 76,000 crore plus debt. What is being done to deleveraging it, from an India point of view.A: We have not yet made a plan for that, but, we will let you know as and when it happens.Q: But bringing down debt is on the anvil as far as your strategies are concerned?A: One of the ways of bringing down debt is an IPO itself.Q: Couple of reports as far as tower sale is concerned, would in that case at a later date or anytime in the future look at selling your Vodafone tower business? Or probably divesting stake in these ventures?A: There have been no real announcements in any of these areas whether we would like to divest our tower business or even our own Vodafone towers which we have about 7,500 towers.Q: So there are no plans on that?A: I never said that. I said we have made no public announcements in any of these two areas.Q: The 4G launch, it is in December, just a short couple of weeks to go as you had told me earlier that it will be a phase launch; you will start with metros. By when are you looking at a pan India launching. Is there a timeline that you have in mind?A: Let me give some statistics on 4G. Today we have about three percent of our base which has a 4G handset and about 28 percent of our base has a Smartphone or a 3G handset and that is the scope. So the maximum I can sell 3G is to 28 percent, because that is the amount of handsets available in my base. Similarly 4G is only three percent. So we believe just like 3G evolved and we have seen it internationally, Vodafone is an international company which has launched 4G in more than 20 countries. So we know how the 4G ecosystem evolves and it will definitely be initially metro based and then it evolves to the other towns. And that is how the ecosystem does because everybody has to change the handsets and buy a 4G handset as well as change the Subscriber Identity Module (SIM) card. These are the two biggest barriers to enter 4G.Therefore if you look at what we have done is, we have announced in the first phase; the first phase I want to define it as through December this year and March next year. So just four months. We will be launching five markets which includes Mumbai, Delhi, Kolkata and Karnataka and Kerala as a state. And if you see within that are the top four cities of this country; if you call Bengaluru, Kolkata, Delhi and Mumbai. So the top four cities which have the maximum 4G handsets prevalent within the base, we will be launching within the first phase and this protects about what we estimate to be a little under 50 percent of our total data business and therefore this is where we also feel that 4G will be first taken into by the customers.Q: One of your peers has already come out with their launch, of course as many analysts have been saying, it is not necessary that they will have the first mover advantage. But I want to understand how you will differentiate your pricing? I know you will not give me details on your pricing just yet, but how will you differentiate your pricing to be able to have an edge against your peers?A: I have many edges against my competitors. Firstly, I will be launching with a 1800 band, which has far greater penetration capabilities than some of the bands that others posses and in terms of pricing, at Vodafone we have always delivered value to our customers and we will continue to deliver value in our 4G. None of our 3G subscribers are unhappy with our pricing, they believe we deliver the value, as well as the experience. And that is what we will continue to focus on even in 4G.Q: The one thing that everyone was waiting for was clarity as far as spectrum trading and spectrum sharing guidelines is concerned, so going forward then, you have always indicated that you are going to be a participant, you continuously look for opportunity, but are there specific areas that you would like to expand in? Are you in conversation with smaller players or larger players for either spectrum sharing and trading? Which of these on the next couple of quarters? Are these specific concrete discussions that would lead into results?A: As Vodafone we welcome the spectrum trading and sharing guidelines which have come out from the government, because we believe that the spectrum is scarce and it has been very fragmented because it is divided among large number of players in the industry and therefore everybody is not using it optimally. This gives a chance for people who are not using it optimally to trade it or share it with others, so that the same spectrum can be more optimally used vis-à-vis subscribers. And that is why we welcome the guidelines. We are open, as we have always indicated, to talks with whoever is open to selling or sharing in terms of the business opportunity, because we believe that as a company we need to have far more spectrum bands to provide greater and better experience, services to our customers. And therefore we are open to dialogue with anybody who is willing to sell as long as the price is right. Ultimately it is a business call on what is the business deal all about and what is the business case all about really.Q: How is the pricing being structured here because there is no clear indication on exactly how the pricing will be structured if you are actually looking at buying out from any of the smaller players?A: It is a very simple thing because if you want to trade what is the price you are selling it.Q: Where do you stand as far as the cap is concerned on either of these?A: We have no caps in any of these circles as of now.Q: Band and circles what specially are the areas looking at? Or that you need to expand it?A: We already have 2G spectrum. We have had that for 20 years plus as you can see we have had subscribers. So in band and spectrums what we are interested is the data bands of 3G and 4G.Q: In terms of your future capital expenses, say in the next two years what is the kind of investment that you are putting into keeping 4G in mind specifically?A: We haven't given any forward looking statements in terms of future investments but we have said that we have been investing in this country between Rs 8,000-8,500 crore consistently and we believe that is the kind of level that we should continue.Q: Vodafone as you said is the largest FDI investor in the country but there have riddled tax problems. One of the issues have been sorted but the main tax case is under scrutiny? I know your answer to this but I want to understand from you. The government has been making many clear statements that this is on their agenda. This is something that they want to sort out. So, has there been any indication from the government as far as probably an out of court settlement is concerned, probably fast tracking this case is concerned?A: So, the government doesn't write to us because we are not the shareholder. The government writes to our shareholder which is the Vodafone Group in UK. Therefore whatever dialogues take place takes place with them. So, we as Vodafone India really don't have those tax cases on our balance sheets or our P&L. So, it is not very fair for you to ask me that comment because it doesn't concern me, it concerns my group.Q: But would you say now that regulatory issues do concern Vodafone India. Do you believe now keeping in mind spectrum trading, sharing guidelines. Keeping in mind all the various efforts that have been put in place to smoothen the regulatory environment. Even the tax environment by the government. Do you believe that the telecom sector is right now in a better place from a regulatory point of view than it was about 1-2 years ago?A: There is more dialogue, there is more conversation, there is more discussion than was earlier, definitely so. And there are some good regulations and there are some which we are battling against. So, you can't say, it is only one way street. Some regulation we are welcoming. Ultimately the biggest problem in our industry has actually been just these two things. The price of spectrum and the quantity of spectrum. Until these two are licked really industry cannot come on to a sound footing. Ultimately that is what really needs to be resolved on a long term. It is not a current government issue. It is from the past, but ultimately those need to be licked in some way or the other. The price of spectrum we pay in India is higher than what we would pay in Europe for similar levels and also the brands are very small. So, that is the other problem.Ultimately for our country to go forward and leap into the future we need to have broadband highways and the government needs to decide whether it wants a single lane highway or a six lane highway. Obviously the experience in a six land broadband highway in this case is going to be far superior for our customers than a single lane highway. And in this case by our customers I mean all industries which make up the market place because all industries require broadband in the future for the future of their industries. And the faster we have this as infrastructure the better off our country will be and more future proof.Q: Where do you stand as far as net neutrality is concerned?A: We have publically said, we are very pro-neutrality. We have always been for it, we have always been for consumer choice, we believe the customer should be able to choose which site they want to go on or what they want to do and we have also said that we are very pro over-the-top content (OTT) players because they help us generate data revenue because ultimately data is consumed thanks to this OTT players whether it is Facebook or whether it is WhatsApp. Even when you send a WhatsApp to another person even his incoming service is consuming data. So, we have always welcome that neutrality. There is only one thing we said. We also want net equality which we have defined as that if you are providing the same service then the same rules need to apply. That is all we have said as an organisation.