Vodafone has reported a 23.59% increase in India Service revenues at GBP 3804 million for the full year ending 31st March 2011 (FY11), up from GBP 3069 million reported the previous fiscal year (FY10).
The data (both data access and mobile value added services) and messaging (SMS) revenues combined contributed a combined 10.99% to total service revenues, compared to 9.03% the year before. But the real story is in the quarterly figures, where for the last quarter (Q4-FY11), the contribution of data and messaging was 11.84%. Quarter on quarter, the contribution percentage is on an upward slope, though it’s worth pointing out that messaging revenue declined 4.26% QoQ. Data’s been on an upwards slope, and on the conference call, Vodafone exec’s didn’t go into details of the impact of 3G deployment in India.
On its a conference call, Vodafone execs said that for the company, at a global level, the growth in data revenues surpassed the decline in voice revenues. Data is 80% of Vodafone’s traffic in Europe, and the company is investing in “video management” to reduce volumes by 15-30%, as well as offload traffic to WiFi.
In India, it appears from the chart above, the growth in data revenues in Q4 surpassed the decline in messaging. However, there is no consistent decline in messaging revenues so far, but we’ll keep an eye out for it in the following quarters, to check whether there is a switch.
Vodafone reported an EBITDA of GBP 985 million for the full year (FY11), with an EBITDA margin of 25.6%, compared with an EBITDA of GBP 807 million and an EBITDA margin of 25.9% for FY10. The company says that its performance in India has been driven by increasing voice penetration and a more stable pricing environment.
Note that the figures below include the impact of foreign exchange.
ARPU, 3G, Minutes Of Use, Customers & Churn
– 3G: Vodafone did not disclose the number of 3G customers it has, only that it has 5500 3G sites active in India, and is targeting 12000 3G sites by the end of this fiscal year (FY12)
– Mobile Money: Vodafone said that its ‘mobile money transfer platform’ is being trialled in India. We’re not sure of what they mean by this – as far as we know, the Reserve Bank of India has not given a Prepaid payment instrument license to Vodafone, and Vodafone has a ‘Banking Correspondents’ tie-up with ICICI Bank, which means that the customer is that of the bank, and not of Vodafone. Airtel Money, though, is a prepaid service.
– ARPU: Vodafone India’s (blended) ARPU declined quarter on quarter Rs 171 from Rs 176 the previous quarter.
– PostPaid: There was a fairly significant decline in post-paid ARPU, from Rs 756 to Rs 728. This co-incides with an increase in post-paid churn, which was 28% (over a four quarter period), compared to 21.1% last quarter (again, for a four quarter period).
– Prepaid Churn: increased to 52.1% for a four quarter period, and pushed up overall churn to 50.9%
– Minutes of Use: increased to 119.29 billion from 110.62 billion, even as prices, according to the company, showed signs of stability.
Note that Vodafone reports churn over the last four quarters, instead of reporting churn for the quarter.
– Net additions: Vodafone reported higher net adds at for the quarter, up to 10.3 million, compared with 8.70 million the previous quarter.
– Total connections: Vodafone reported 134.57 million connections for the quarter. Not all of these are active – according to number released by the Indian telecom regulator, at the end of March 2011, 79.47% of Vodafone’s connection base was active.
The VoIP, Net Neutrality Discussion
The other notable discussion on the Vodafone conference call was the disclosure that Vodafone Netherlands as Internet Telephony (VoIP) enabled on only tariffs more than EUR 40, at a monthly fee of EUR 5, which led to questions about net neutrality, and how regulators view this situation. Vodafone executives on the call said that while Microsoft buying Skype is “one of the best outcomes for the seller in terms of price, we are not worried about the kind of VoIP integration into OS, because they are freely downloadable (in any case). We are looking to push integrated pricing. Voice and video calls are possible, and for video you have tiered pricing. The Netherlands case study indicates that there is a strategy with respect to voice over IP.”
In response to a follow up question on the same issue, Vodafone execs said that they give a choice to a customer to use VoIP, and in that case he has to subsrcibe to the right plans, to be able to use VoIP. There is no discrimination between service providers, but tariffs based on applications, and compliant with European regulations”. They added that “in Europe we have lower spending per customer as compared to US. We need investment in fixed infrastructure, and we need employment. I have prices which are going down. We are in a price-deflationary 10-12-13% investment hungry environment. this is a transition phase, from voice to data, and the debate on net neutrality in Eeurope has been much healthier than the US, and investment friendly. If you need investment and employment, you need to preserve margins.”
In India, with no bundling of handsets among GSM operators, we should see this debate appear once 3G becomes more pervasive, and LTE launches.