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Vodafone India added 2.3M data connections in Q1FY18, ARPU weakens

Vodafone India added 2.3 million data connections during the quarter ended June 3, 2017 (Q1FY18), taking the total to 69.2 million connections, up from 66.9 million data connections in the previous quarter (Q4 FY17).

Jio’s freebies and increasing competitive pressure in the industry had an effect on all cellular operators in the country, but Vodafone seems to show signs of recovery. The telco had lost 4.6 million data connections in Q3FY17 and at least 1 million of them were 3G/4G customers. However, in Q1FY18, Vodafone’s 3G/4G subscriber base increased to 41.1 million connections, up from 37.7 million 3G/4G connections during Q4FY17. Overall the company reported 211.9 million customers, up from 209 million in the previous quarter.

Although the telco is gaining back customers, revenues are growing at a flat rate. Vodafone India’s overall service revenue was at €1.385 billion during Q1FY18, which is flattish growth when compared to €1.379 billion in the previous quarter. Overall service revenue stood at €1.510 billion in the same quarter last year. Mobile revenues for the quarter stood at €1.303 billion, up marginally from €1.193 billion in the previous quarter and down by 9.5% YoY from €1.441 billion in Q1FY17.

Mobile metrics

The addition of new data customers has also reflected on Vodafone India’s data usage. The total amount of mobile data usage for the quarter increased to 237,855 Terabytes (TB) in Q1FY18, which is a whopping 83% QoQ growth when compared to 129,424 TB usage in the previous quarter. In the same quarter last year, data usage touched 100,541 TB, and has been growing at a significant rate since then.

The telco had reported a slight fall in data usage in Q3FY17 after Jio’s launch. Data usage had dropped down by 4.5% in Q3 but an increase in data usage doesn’t mean that it is making enough money per customer. Overall (prepaid + postpaid) mobile Average Revenue Per User (ARPU) was down marginally to Rs 141 during the quarter from Rs 142 in the previous quarter. But note that Mobile ARPU (prepaid + postpaid) stood at a high of Rs 184 in the same quarter last year (Q1FY17), and has been falling considerably since then, especially in the past few quarters after Jio’s launch.

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Vodafone makes more money from postpaid: It’s postpaid mobile ARPU was at Rs 537, compared to Rs 109 for prepaid in Q1FY18. But again, both prepaid and postpaid ARPU has been plunging since Jio’s launch. Note that Vodafone’s competitor Airtel had recently launched an option for postpaid customers to carry forward their balance data to the next billing-cycle to tackle falling postpaid ARPU.

Other financial highlights

-Data browsing revenue declined by 9% YoY to 1.385 billion due to further ARPU dilution
– Voice revenue declined by 8.6% YoY to 924 million in Q1FY18 from1.011 billion in the same quarter last year.
-Overall churn rate (prepaid + postpaid) stood at 61.2%, with prepaid generating a higher churn rate of 64.1%
-Average data usage per customer has more than doubled year-on-year to 1.1GB per month.
-Vodafone India also claimed that there was a “continued significant decline in voice and data pricing”, wherein both segment’s pricing dropped 32% and 67% respectively.

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