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Vodafone India Had 27.5M Data Subs At End Of Q2-FY12; Service Revenue Increases 17.4% YoY

Vodafone‘s India services revenues for the quarter ended 30th September 2011, was at GBP 1056 million, a growth of 17.4% YoY. According to the company this growth was on account of improving underlying growth boosted by new SMS termination charges in the Indian market. Revenue from voice services decreased 0.62% quarter on quarter to GBP 808 million, though contribution to total revenues declined marginally to 76.52% of total. The contribution of data and messaging grew to a combined 14.4% of total revenue, up from 10.68% reported last quarter.


Messaging revenue picked up at GBP 63 million, an increase compared to last quarter’s revenue of GBP 44 million. The company has stated that it had  27.5 million data customers at the end of 30th September 2011, up 142% year on year. 3G was available to Vodafone customers in 534 towns and cities across 20 circles at 30 September 2011.

Update: Vodafone India informs us that the monthly active Opera Mini users in Vodafone India is about 4.4 million.

The margin in India fell slightly despite strong top line growth as a result of rising commercial costs and the dilutive impact of SMS termination, according to the company. The effective rate per minute is stabilising as operators increase headline voice tariffs and focus on promotional offers.

Other Operational Highlights:

– ARPU: Vodafone India’s (blended) ARPU declined quarter on quarter Rs 168 from Rs 169 the previous quarter. ARPU has been sliding for many quarters.

– PostPaid: Postpaid ARPU marginally declined to Rs 742 quarter on quarter, from 749. Prepaid ARPU continued to fall to Rs 140 from Rs 141. 95.3% of Vodafone’s subscriber base is pre-paid.

– Churn: Postpaid churn increased to 22.4%, while prepaid churn grew to 65.2%. Please keep in mind that Vodafone accounts for churn over four consecutive quarters.

– Minutes of Use: increased to 127.77 billion from 127.62 billion, as prices continued to stabilize.

Transfer of Indian Shareholding

The total cash outflow from Vodafone, including cash already paid for the first tranche of Essar Communications’s shareholding in Vodafone India,was expected to be approximately US$5.5 billion ( GBP 3.4 billion). This included:

A net payment of US$3.3 billion (GBP2.0 billion) for the 22% stake in VIL held by Essar Communications- ECL and Essar Com- ECom after withholding tax of US$0.9 billion (GBP0.6 billion).

The transfer of these shares from ECL and ECom to Vodafone was completed in two tranches on 1 June 2011 and 1 July 2011. Euro Pacific Securities Ltd., an indirect wholly owned subsidiary of Vodafone International Holdings B.V., had sought confirmation from the Authority for Advanced Rulings (‘AAR’) in India on whether withholding tax was due in respect of consideration payable on the acquisition of Essar Group’s offshore holding in VIL. A ruling from the AAR was expected by the end of May 2011 but was adjourned until 1 July 2011, when the case was withdrawn.

Whilst Vodafone and Essar continue to believe that no tax is due on this transfer, it was viewed as prudent to pay withholding tax on a “without prejudice” basis. The payment was made on 5 July 2011.

A payment of US$1.3 billion (GBP0.8 billion or INR 56.7 billion) relating to the remaining 11% stake in VIL held by ECHL and the settlement of all shareholder claims. On 10 August 2011 Vodafone announced that Piramal Healthcare (‘Piramal’) had agreed to purchase approximately 5.5% of the issued equity share capital of VIL from ECHL for cash consideration of approximately US$0.6 billion (GBP 0.4 billion).

The transaction contemplates various exit mechanisms for Piramal, including both participation in a potential initial public offering of VIL and a sale of its stake to Vodafone. Approval for the sale of the remaining 5.5% interest in VIL currently held by ECHL is pending.

Downloads: Press Release | Presentation | Spreadsheet | Transcript

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