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British telecom giant Vodafone will spend an extra Rs 7,000 crore in India between April 2014 and March 2016 on strengthening its network, Vodafone India’s chief financial officer, Colman Deegan, said here on Tuesday. The announcement comes within two weeks of Vodafone Plc, the British parent, saying it would spend Rs 10,141 crore to buy out minority stake holders in the Indian entity, to have 100 per cent control from the 64.38 per cent at present. It has sought approval from the Foreign Investment Promotion Board.
Of the Rs 7,000 crore, a little more than 60 per cent would be invested in enhancing its data network, said Vodafone India’s managing director and chief executive officer, Marten Pieters. “This Rs 7,000-crore capex will only be invested in enhancing network, fibre optics and assets. This is in addition to our usual operating expenditure of Rs 4,000-5,000 crore every year. Also, this does not include the cost of spectrum,” said Deegan. Vodafone has invested Rs 56,000 crore in India since its entry.
Vodafone’s plan to spend Rs 7,000 crore to enhance its network here is part of its Project Spring. This entails £7 billion of spending worldwide by March 2016, to increase the speed and capacity of its networks. Vodafone has said £1.5 billion would be spent in emerging markets, which include India, Africa and Turkey.
Also, Vodafone Plc chief executive Vittorio Colao said on Tuesday the company would look at listing its Indian entity once the Rs 11,200-crore tax dispute with the government was settled. Vodafone India, second largest telecom operator by subscriber base in the country, said on Tuesday its service revenue rose 13.5 per cent during the first half of the current financial year. It reported service revenue at Rs 18,481 crore during this April-September period, as compared to Rs 16,283 crore during the corresponding period of 2012-13.
During the second quarter, service revenue was Rs 9,120 crore, about 13.2 per cent higher than the corresponding quarter of the previous financial year. It was Rs 9,360 crore in the quarter ended June. Total revenue rose 16.5 per cent to Rs 20,476 crore for the six months ended September, on strong growth in voice minutes and data revenue. It had reported Rs 17,581 crore of revenue in the first half last year.
“We continue to show a healthy revenue growth, driven by price hardening, an exponential growth in data and a solid subscriber base. Our focus on profitable growth has led to a strong margin improvement and to a strong operating free cash flow,” said Pieters.
Vodafone’s voice revenue realisation per minute marginally dropped to 46.7 paise during the July-September quarter, from 46.8p earlier. However, it has risen on a half-yearly basis. Average revenue per user (Arpu) dropped to Rs 200, from Rs 203 in the April-June quarter. On a half-yearly basis, though, it increased substantially.
Ebitda (earnings before interest, taxes, depreciation, and amortisation) improved by 30.6 per cent to Rs 6,519 crore in the first half, from Rs 4,993 crore in the same period of FY13. The Ebitda margin rose to 31.8 per cent during the first half, as compared to 28.4 per cent during the same period of the previous year.
Its 3G (third-generation services) subscriber base jumped 111 per cent to 4.5 million in the April-September half, as compared to 2.1 million during the corresponding quarter of FY13. “Currently, about a third of our data revenue comes from 3G customers,” said Pieters. It has a total of 42.5 mn data subscribers.
After Vodafone announced its results, Goldman Sachs analysts in a report has stated that there was possibilities that the British telco may increase its incremental market share at the expense of Bharti or Idea if Vodafone continued to follow an aggressive investment approach and consequently benefits more from data than Bharti or Idea.
“In our view, the positive increase shown by Vodafone in the seasonally slower quarter may be due to q-o-q currency movements. We note that in reported currency, cellular revenues declined 12.7 per cent q-o-q. Vodafone’s RPM (revenue per minute) was up 0.7 per cent q-o-q to Rs 0.45 (vs. flat/+1.9% q-o-q for Bharti/Idea) and total MoU (minutes of usage) declined 2.2 per cent q-o-q (vs. 2.7 per cent or 5.8 per cent q-o-q decline for Bharti/Idea). We believe these numbers may not be comparable to Bharti/idea as they may also be impacted by currency fluctuations,” the Goldman Sachs report noted.
