In India, as elsewhere, the strategic rationale for fixed network assets increasingly is that it provides offload for mobile device traffic. That is one major reason Vodafone India has purchased the fixed network assets of YOU Broadband, which operates cable TV networks across 12 cities in India.
Unlike some other moves happening in the India telecommunications market, which features consolidation and mergers among mobile operators, the Vodafone purchase of YOU Broadband gives the mobile operator fixed assets. There typically are several potential advantages. In some markets, a fixed operator buying mobile assets, or mobile adding fixed, is simply a way to increase account base, gross revenue and profit margin.
Such moves can enable the sale of four or five anchor products, instead of two (mobile voice and fixed voice), creating economies of scope (selling more products to a given number of customers).
At other times, though those are important values, fixed assets are a strategic addition to a mobile network capability.
Vodafone’s acquisition of fixed network access assets in India follows similar efforts in other Vodafone markets, part of a strategy to bolster mobile network performance by enabling offload of mobile data demand to owned fixed networks.
Most descriptions of YOU Broadband emphasize its ownership of 1900 miles of backhaul fiber and 3700 miles of access facilities, serving consumers, smaller businesses and enterprises with triple play services and Internet access up to 100 Mbps.
Most descriptions of the company suggest it is a “small Internet service provider,” which partially explains why Vodafone emphasizes the network mileage, not customer revenue or customer accounts in its justifications for the buy.
