vodalogoVodafone India has reported 22.6% year-on-year increase in revenues in the quarter ended September 2009, but down 6.8% sequentially, with voice and data revenue falling and messaging revenue up 4.5%.

This trend in falling revenues quarter on quarter has been noticed amongst other telcos – Bharti Airtel‘s was down 0.97%, Tata Teleservices Maharashtra Ltd’s 0.13% and RCOM‘s fell by 10.6%. This decline may continue for a while as the mobile industry is seeing hyper competition amongst its larger players, and may end only when, as Idea Cellular’s MD Sanjeev Aga predicted recently, India’s telecom Merger & Acquisition rules change. WSJ reports, quoting sources, that in the last month, Vodafone has seen increase in connections in Madhya Pradesh, Bihar and Uttar Pradesh, where per second and Rs. 0.50 per minute scheme for long-distance calls were launched. So for the quarter ending December 2009, we expect an increase in the subscriber base, but also an impact on Average Revenue Per User (ARPU) and Revenues.

Data revenues for Vodafone slipped 7% quarter on quarter but rose up 17.6% compared to quarter ended September 2008. Messaging (SMS) revenues have revived, rising 4.5% sequentially.

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For Vodafone, margin pressures in India were higher due to the intense competition it witnessed in the quarter with aggressive rebalancing of tariffs with per second billing and the continued network expansion.

Competition, ARPU & Churn

Vodafone’s ARPU has fallen from Rs. 247 to Rs. 222, Airtel recorded Rs. 252 while RCOM’s ARPU for the quarter crashed to Rs. 161. Competition and the addition of more rural connections also resulted in the fall in the effective rate per minute and a decline in usage per customer. The telco reported that India growth was impacted by the termination rate cut effective from April 2009.

Vodafone calculates annualised churn: for the quarter ended Sep 09, this was at 33.3%. Airtel’s average monthly churn in prepaid segment is 4.6% while RCOM’s at  1.3%.

Additions this quarter have fallen slightly to 6,396,000 customers; the total is 82,846,000 mobile users as of Sep 09. The total minutes carried on its network was 76.1 billion, compared to Airtel’s 164 billion and RCOM’s 84.5 billion minutes.

93.4% of its wireless customers are pre-paid users, lower than Airtel’s 95.2% and RCOM’s 94.4%.

India Tax Case Continues

As recent as last week (October 30, 2009), Vodafone received yet another notice from Indian Tax authorities demanding why it believes they do not have competent jurisdiction to continue the case. The telco’s holding company Vodafone International Holdings B.V. has been embroiled in the case since February 2007 for witholding tax payments after acquiring Hutch Essar (now Vodafone Essar) from Hong Kong based Hutchison Telecommunications International Ltd (Hutch). VIHBV is preparing a response. More on this on Business Line.

Key Corporate Developments

July 3 – Receives the green signal from India’s Foreign Investment Promotion Board to launch Internet Services

August  27 – Launches Music Junction in Punjab

Sep 29 – Announces new tariff on STD calls


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