Vodafone, in its concall discussing the Q2 results, said that it has not made provisions for a settlement in the tax case in India. It also blamed the regulatory changes for the lower rate of growth in service revenues. It’s also banking on data for revenue growth. Some notes:
- No provision made for Indian tax case: Andrew N Halford, Chief Financial Officer, Executive Director and Member of Executive Committee, informed that the company has decided that it will not make any provision for settlement with regards to the tax case in India. He said, “Of note, we have looked very, very carefully at the situation in India with our tax case over there. And we have concluded that we will continue not to make any provision for that settlement.”
- Slightly lower rates of volume: Vodafone said that the company witnessed slightly lower rates of volume in India, because of some regulatory constraints.
- The Service revenue growth was 11% at lower levels than the company recorded previously due to lower customer growth generally in the market and some regulatory controls that were applied during the period, said the company. However, ARPUs were up by 3%. Drop in minutes was due to subscribers and seasonality factors.
- Vodafone witnessed a 3-percentage point improvement in the margin in the Indian business. It said that the reason for the growth was partly about scale and partly about lower relative A&R.
- It also launched m-Pesa with ICICI Bank. “we will continue, of course, to expand our financial services presence with the deal with ICICI in India, with the ability to do international remittances and to really bring to these markets financial services, basic financial services, which are data, non-voice type of revenues, but with a very high value added.”
- On data users: The company sees data as a continuing phenomenon- “We have 30 million users, but only 2m are on 3G. And there is a big demand and now, low-end phones are available.”
The company also hosted an H1 results conference in India. We asked Vodafone CEO Marten Pieters to share the split between mobile data and VAS revenue but he declined to share specifics, although he did admit that the share of VAS has declined during the last quarter due to regulatory directives.
- On IPO plans, Pieters reiterated that the company does intend to go for an IPO but was awaiting clarity on regulatory matters including spectrum fee, refarming, 3G ICR and other related developments. He also said that detailed regulation including controls on prepaid tariffs and 3G ICR agreements was not good for the industry . He said that the company has also asked the government to abandon staggered spectrum usage fee, and said that it is punishing telcos that use spectrum efficiently. He said that the government should be careful of extracting revenue from the sector as the industry was not in good health. He also called for a level playing field and mentioned that BSNL and MTNL were sitting on precious spectrum resources.
- The company upgraded its retail touch points,Vodafone Stores, to feature smartphones and tablets in order to encourage data adoption, and drive 3G growth.