United Kingdom-based Vodafone Group, the world’s second largest mobile phone operator, reported that revenues from its India operations grew 6.3% year-over-year from $1.5 billion to $1.6 billion for its third fiscal quarter ended Dec. 31.
The company’s service revenue in India grew by 20.0%, driven by an increase in the customer base, continued growth in incoming and outgoing voice minutes and 46.4% growth in data revenue.
“At [the end of 2011] data customers totaled 31.2 million. Whilst the market remains highly competitive, the effective rate per minute increased slightly compared to Q2 following the penetration of recent price rises into the customer base,” the company said in a statement.
According to Vodafone, it is offering 3G services to customers in 683 towns and cities across 20 circles at the end of 2011.
Despite what it termed strong growth in emerging markets as well as its 45% investment in U.S.-based operator Verizon Wireless and increased usage of mobile data services, Vodafone noted challenges in other markets resulted in a 2.3% drop in total revenues to $15.5 billion during the quarter.
Service revenues dipped 3.2% year-over-year to $14.1 billion, with a 3.1% drop in its European operations and a 1.5% drop in operations across Africa, the Middle East and Asia-Pacific.
Vodafone noted that service revenues across its operations Germany, the United Kingdom and the Netherlands increased due to strong demand for data services, while operations in Turkey posted a 23.5% sequential increase due to “continued expansion of the contract customer base.” However, Southern Europe was more challenging as operations in Italy and Spain posted significant decreases due to “macroeconomic challenges and competitive pricing pressure.”
Vodafone also reported that capital expenditures for the quarter were down 5.2% to $1.95 billion.
While revenues were down across the board, Vodafone did note that free cash flow surged 34.9% during the quarter to $1.95 billion.
“Market conditions in southern Europe remain difficult. In Italy service revenue fell by 4.9% compared to a 3.% fall in Q2, due both to macroeconomic challenges and competitive pricing pressures in voice and messaging services. Despite the challenging environment, Spain delivered a second quarter of sequential improvement in the service revenue trend to -8.8% (Q2 -9.3%),” the company noted in a statement.
“We are continuing to make progress in the key strategic areas of data, enterprise and emerging markets. Despite the further deterioration of the southern European economic environment during the quarter, our broad geographic mix is delivering a resilient overall performance. Our improved value perception, strong cash generation and healthy balance sheet give us confidence that we can continue to execute well,” Vodafone CEO Vittorio Colao said.
The company said it was pleased at the Supreme Court of India’s judgment in a recent tax case. The Indian apex court, in its judgement last month, had set aside the Bombay High Court judgment asking Vodafone International Holding to pay income tax of $2.18 billion on an overseas deal between Vodafone and Hutchison Essar.
While commenting on the recent verdict of the Supreme Court that resulted in the cancellation of 122 2G licenses, a Vodafone executive said it would lead to rationalization in the sector in terms of the number of players. The company also noted that given an option it would like to participate in the auction of spectrum freed after the cancellation of the licenses.
Vodafone also reported that Piramal Healthcare had agreed to purchase approximately 5.5% of the issued equity share capital of Vodafone India from ETHL Communications Holdings for a cash consideration of stake in VIL to approximately 11%.