The Indian telecom service business of Vodafone Group PLC has reported an adjusted operating loss of $15 million on total revenue of $3.53 billion in the first half of its 2011-12 financial year, despite a double-digit increase in revenue compared with the same period last year.
The Indian operations, run by Vodafone India Ltd., had posted an adjusted operating profit of $10 million on total revenue of $3.12 billion in the first half of the previous year. The telecom service revenue in India grew 18.4% during H1 2011-12, driven by a 25.5% increase in customer base, strong growth in incoming and outgoing voice minutes, and 66.1% growth in data revenue, the London-based parent company said in its consolidated group results.
“A year on from announcing our updated strategy, we are making clear progress. We are gaining share in most of our major markets, through our focus on superior network quality and an improved customer experience. In addition, we are achieving sustained growth in the key areas of data, emerging markets and enterprise,” said Vodafone Group CEO Vittorio Colao.
“Growth also benefited from operators starting to charge for SMS termination in Q2. At 30 September 2011 data customers totalled 27.5 million, a year-on-year increase of 142%. This was driven by an increase in data enabled handsets and the impact of successful marketing campaigns,” the company said.
“Whilst the market remains highly competitive, the effective rate per minute is stabilising as operators increase headline voice tariffs and focus on promotional offers. Following the launch of commercial 3G services in February 2011, 3G was available to Vodafone customers in 534 towns and cities across 20 circles at 30 September 2011. EBITDA grew by 14.8%(*) driven by the increase in revenue and economies of scale, partially offset by higher customer acquisition costs and increased interconnection costs,” the company said.
The company also said that “neither it nor any other member of the Group is liable for Indian withholding taxes on the Hutchison transaction in 2007 and continued to take actions to defend itself vigorously both during and after the six months ended 30 September 2011. The Group did not carry a provision for this litigation at 30 September 2011 or 31 March 2011.”
“The hearing before the Supreme Court, which is considering the appeal on the issue of jurisdiction as well as on the challenge to quantification, finished on 19 October 2011 and the decision of the Supreme Court is expected in due course. The outcome of the proceedings may or may not conclude on the matter in its entirety and there can be no assurance that any outcome will be favourable to Vodafone International Holdings B.V. or the Group,” the company said.
Vodafone Group also issued an update on its agreement with Essar group:
On 1 July 2011 Vodafone Group, Essar Communications (Mauritius) Limited (‘ECML’) and ETHL Communications Holdings Limited (‘ECHL’) agreed the terms under which ECML and ECHL would sell their direct and indirect shareholdings in Vodafone India Limited (‘VIL’). Under the terms of the agreements, ECML’s wholly owned subsidiaries, Essar Communications Limited (‘ECL’) and Essar Com Limited (‘ECom’), sold their entire 22% shareholdings in VIL, and ECHL agreed terms to dispose of its 11% shareholding in VIL.
Further, the parties agreed that all outstanding claims between them are terminated, and that all future claims have been renounced. The parties also agreed to cooperate fully in seeking all regulatory approvals necessary for the completion of these transactions. ECML and ECHL’s contractual rights in respect of VIL under their prior agreements with Vodafone have terminated, and both ECML and ECHL relinquished all of their board seats in VIL.
(Note: All amounts in the post marked with an “(*)” represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and foreign exchange rates, according to the company’s financial report.)
