This ad will auto close in 10 seconds

Vodafone's India biz profit up 14%; takes on TRAI over spectrum issue

Last Updated: Tuesday, May 22, 2012 - 22:34

Mumbai: The country's second largest mobile operator Vodafone Tuesday reported a 26.3 percent rise in pretax profit at Rs 8,549 crore on the back of an improvement in average revenue per user and massive increase in revenue from data services.

"We are happy to announce an overall healthy growth in our business, which makes India operations the sixth largest in terms of revenue for the Vodafone Group," Vodafone India Managing Director and Chief Executive Marten Pieters told reporters here.

The total revenue of the operator, which is in the midst of a controversy over tax on its acquisition of Hutchison's stake in Hutchison-Essar for USD 11.2 billion in 2007, rose by 19.3 percent to Rs 32,564 crore in 2011-12 fiscal.

Announcing Vodafone's first-ever earnings since it entered the country in 2007, Pieters said, "We have had a really good year with very strong operational performance, continued revenue market share (RMS) growth and an improvement in margins.

"Our new circles have performed very well and we now have over 10 percent RMS in four of the seven circles. We crossed the milestone of 150 million customers."

After a long gap, the industry saw the key profitability parameter average revenue per user (ARPU) rising, Pieters said, adding Vodafone's ARPU rose a tad over 5 percent during the year from Rs 170 in Q1 to Rs 180 in Q4.

He also said the numbers include revenue from Indus Towers in which Vodafone has 42 percent interest.

The impressive show was helped by Rs 2,647 crore revenue from data services in FY2012, up 50.8 percent from Rs 1,756 crore in FY11, chief financial officer Colman Deegan said.

Deegan further said, the company, whose subscriber base crossed 15.5 million in the year, had a net debt at Rs 30,000 crore. It plans to spend Rs 6,216 on capex this financial year.

When asked about debt reduction plan, Deegan said, there is no such plan as of now.

Operational performance improved further with customer base crossing the 150 million mark, taking its revenue market share (RMS) to 20.6 percent.

"Pricing showed clear signs of stabilisation after a prolonged price war," Pieters said.

The company also said data users soared 81.5 percent to 35.4 million, while the company could attract 1.7 million customers from other operators through the mobile number portability. This makes Vodafone the second best net gainer of the MNP platform, Pieters said.

The company attributed the robust earnings to service revenue as well as higher customer base.
The growth also came from mobile operators starting to charge for SMS termination during the second quarter of the 2012 financial year.

During reporting period, the company entered the Orissa, Bihar, Madhya Pradesh, Assam, North East, Jammu &Kashmir and Himachal Pradesh circles.

Marten Pieters, however pointed out, “TRAI recommendations are economically unattractive and that the regulatory scenario is changing on a day-to-day basis.”

"It is creating a lot of pressure on us," he said

Stating that the rules regarding the business are very volatile which change by the day now, he said, "we also would need some certainty around the valuation of the business, and of course, pricing and availability of spectrum is a very important issue for every operator."

When asked about whether the company will participate in the forthcoming spectrum auctions, Pieters said, "spectrum is the most fundamental issue in the telecom business. But the way the regulator has proposed its pricing and its availability, it will not serve any purpose."

"The TRAI proposal will create only artificial shortage. What is the purpose of auctions if it cannot ensure delivery of the auctioned radiowaves" he questioned.


First Published: Tuesday, May 22, 2012 - 14:55
comments powered by Disqus