Vodafone India exits FY16 with 5% revenue growth

Despite investing Rs 8,000 cr in capex, the company's operating margin has remained stable at 29.5%

Vodafone India has exited, what at best can be called an eventful year (FY16) with a single-digit revenue growth. The Indian arm of the British telecom major saw its service revenue grow five per cent year-on-year to Rs 44,303 crore, thanks to the regulatory impact of lower interconnect and roaming charges.

Adjusting for this, Vodafone's service revenues grew 10 per cent during the fiscal. Data revenues have grown at 45 per cent year-on-year (y-o-y) to Rs 8,263 crore.

GOING STRONG

• Service revenue: Vodafone India’s service revenue grew 5% y-o-y to Rs 44,303 cr
• Ebitda: Its Ebitda or operating income, grew 4.1% to Rs 13,115 cr

Like the industry leader, Vodafone’s revenue growth was also driven by healthy subscriber additions, which grew 7.7 per cent y-o-y to 198 million during the financial year.

Interestingly, Vodafone’s postpaid subscriber base has grown by a healthy 15.2 per cent to 14.2 million during the year. The year has been an eventful one for Vodafone as it had to renew the licences of its existing circles and bid for 3G spectrum in some others. And, despite investing Rs 8,000 crore in capex, the company’s operating margin has remained stable at 29.5 per cent. Its earnings before interest, depreciation & amortisation (Ebitda), or operating income, grew 4.1 per cent to Rs 13,115 crore. The firm continues not to disclose whether it profitable below the operating level. Free operating cash flows increased at a healthy 66.2 per cent y-o-y to Rs 5,354 crore.

The firm’s revenue marketshare has remained flat at 22.3 per cent (December 2015 quarter) unlike rival Bharti Airtel, which has seen revenue marketshare hit a six-year high of 31.4 per cent.

However, despite the headline figures, operating metrics continued to show pressure as voice realisations improved very moderately in the December 2015 quarter. Average revenue per user (Arpu) declined 3.4 per cent y-o-y to Rs 195, while service ARPM (average revenue per minute) declined 1.9 per cent to 48.9 paise. Voice ARPM declined 33.2 paise, but a large part of it was due to impact of regulatory changes.

Vodafone currently has 27.8 million 3G + 4G data subscribers, which is a growth of 43.3 per cent. And, smartphone penetration currently stands at 31.8 per cent of its total user base.