The analysts believe that Vodafone's entry into the Indian market might fuel competition not only in the call charges, but also in the handset market with its agreement with China's ZTE Corp.
Vodafone on Tuesday 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.
This could start further price war in the Indian market - the world's fastest growing telecom market that is expected to grow to 500 million mobile users by 2010 from currently 150 million with an addition of over six million subscribers every month.
Vodafone had on Monday reached an agreement to buy a majority stake in India's fourth largest mobile operator Hutch-Essar for over $11 billion.
The partnership with China's ZTE marks the continuation of Vodafone's Original Design Manufacturer strategy, which is intended to bring to market high-quality and low-cost devices under the Vodafone name.
"This agreement with ZTE will allow us to create an ultra-low cost handset for the emerging markets," Jens Schulte-Bockum, global director of terminals, Vodafone said in a statement from London.The race for Hutch-Essar: Complete coverage
