Vodafone CEO Vittorio Colao this week acknowledged that his company's Indian business faces a tough new rival in Reliance Jio Infocomm, which is due to launch mobile services in the second half of this year, while noting that the market is home to a number of players that are too small to compete, making consolidation a desirable outcome.

Colao's comments came at a press briefing at Mobile World Congress earlier this week, at which he also touched on the subject of Vodafone's much-discussed Indian IPO, its relationship with the government and the dangers of a high-priced spectrum auction in the country.

Reliance Jio Infocomm will be "a formidable competitor," but Vodafone already competes with a number of strong rivals in India, Colao said.

Jio will be "just another powerful one," he said. "We will be as ready as we can to welcome them."

While Jio has the financial clout to join the big guns in India's mobile market, which include Bharti Airtel, Idea Cellular and Reliance Communications, as well as Vodafone, there are a number of small players that could find themselves in difficulties.

"There are too many players in India," Colao said. In a market in which a lot of investment is required, there are "too many subscale [operators]."

The companies that are keen to acquire spectrum in India's upcoming multi-band auction will need to invest heavily.

Earlier this year the Telecom Regulatory Authority of India (TRAI) released a baffling document in which it laid out its recommendations for reserve prices in the auction, the upshot of which was essentially that participants will have to shell out hefty sums – equivalent to multiple billions of euros – in order to secure frequencies.

However, India is a very low ARPU market and regulators need to take that into account. If spectrum prices are too high, "money is not going to go into investment" in networks and services, but will simply be ploughed into spectrum instead, Colao said.

He declined to comment on whether Vodafone will participate in the auction though.

The spectrum auction is one of a number of factors that will impact on the timing of Vodafone's planned Indian