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Vodafone India Q3 FY11 Results: Service Revenue Up 7.12%; To Launch 3G in March

Vodafone India has reported a 16.7% increase in revenues, including a 1.1 percentage point benefit from Indus Towers, the Group’s network sharing joint venture, for the quarter ended December 31st 2010, if you don’t take into account foreign exchange fluctuations. The growth, according to the company, has been driven by an increase of 8.7 million in net customer additions during the quarter and strong mobile voice usage, partially offset by a fall in mobile voice pricing due to strong competition in the market.

India continues to remain the second largest emerging market for Vodafone, after South Africa (Vodacom).  However, if you take into account exchange rate fluctuations, India service revenues improved quarter on quarter by 7.12% , with voice revenues increasing 5.11%, messaging revenues increased by 17.5% and revenues from data/VAS went up by 14.29%. Note that the quarterly figures below include the impact of foreign exchange.

Download: SpreadsheetPress ReleaseWebcastIndia Datasheet

ARPU, Minutes Of Use, Customers & Churn

Vodafone’s ARPU declined quarter on quarter by 0.5% quarter on quarter, to Rs. 176 from Rs. 177. This is despite increasing total minutes of use to 110.62 billion, up from 104.87 billion the previous quarter.  Vodafone feels that the pricing of calls is moderating in the market. Churn over the last four quarters increased to 46.7%, up from 41.4% the previous quarter. Note that Vodafone reports churn over the last four quarters, instead of reporting churn for the quarter.

Vodafone reported 36% higher net adds at for the quarter, up to 8.70 million, as compared to the previous quarter, where the company had reported net adds of 6.49 million. 95% of its subscriber base is prepaid.

3G Roll Out & MNP

After demonstrating the service in October, Vodafone has announced that it will launch 3G in 55 cities and towns of India by March 2011, including the four metros. It feels that the 3G circles that the company acquired in the auction, account for under 70% of 3G revenue potential in India. Vodafone said that it will focus on a strong, quality launch to deliver consistent 3G service instead of launching in a jiffy.
Responding to a question in the earnings call, Vodafone execs said that it sees MNP as an advantage as the port-in to port-out ratio for Vodafone has been favorable in the first 10 days of MNP implementation.

Vodafone Tax Case

Vodafone says it will defend itself ‘vigorously’ against the High Court ruling that orders it to pay Rs. 11,000 crore in tax liability for the purchase of stake from Hutchison. It says:

“Vodafone International Holdings B.V. (“VIHBV”) believes that it has no liability for Indian withholding taxes on the Hutchison transaction in 2007 and continued to take actions to defend itself vigorously in the period. On 22 October 2010 the Indian tax authorities quantified the alleged tax liability and issued a demand for payment of INR 112.2 billion (£1.6 billion) tax and interest. On 15 November 2010 VIHBV was asked to make a deposit with the Supreme Court of INR 25 billion (£350 million) and provide a guarantee for INR 85 billion (£1.25 billion). The Supreme Court will now hear the appeal on the issue of jurisdiction on 19 July 2011. In addition, separate proceedings being taken against VIHBV to seek to treat it as an agent of Hutchison in respect of its alleged tax on the same transaction are now subject to appeal in the Bombay High Court where further actions of the Indian Tax authority are currently stayed and a hearing is scheduled for 8 February 2011. Vodafone Essar Limited’s case also continues to be stayed pending the outcome of the VIHBV Supreme Court hearing. VIHBV considers that neither it nor any other member of the Group is liable for such withholding tax or is liable to be made an agent of Hutchison.”


Vodafone India ARPU Down 7.3% To Rs. 177 For Q2-11

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