Country's second largest telecom player Vodafone today reported 2.60 per cent growth in its pre-tax profit at Rs 6,704 crore for the April-September period, and deferred its IPO due to unfavourable market conditions.
Underlining that headwinds exist on the regulatory and competitive fronts, the company said its revenue growth came slower than the country's GDP growth, at 5.9 per cent to Rs 22,579 crore during the reporting period.
There was also a drop in its pre-tax margins to 29.6 per cent against 30.5 per cent in the year-ago period, but chief financial officer Thomas Reisten called them resilient given the conditions.
When asked about impairment of USD 5 billion taken by its British parent Vodafone Plc on account of India operations, the managing director and chief executive of local unit, Sunil Sood, said it is an accounting issue which will have no impact on operations.
To the crucial question of its impact on valuations, especially given the fact that it is preparing for an IPO, Reisten said it does not impact the IPO preparedness as it is a shareholder issue.
Stating that the company continues to prepare for an IPO, Sood said Vodafone India will be waiting for the market conditions to get better.
"The possibility of the IPO happening this financial year is remote because conditions of the market place are not ready. When conditions are ready and our board gives us the permission, we will do the IPO," Sood said.
Sood said the industry is facing headwinds on regulatory and competitive side, which will result in an "accelerated consolidation" where the weaker players will be taken over by the stronger ones.
The company's net debt came down to Rs 35,430 crore as of September 30, largely on the back of the Rs 47,700 crore equity infusion by the parent during the fiscal.
Sood said Vodafone sees an "explosion of data" in the future and wants to be future-ready, which is seen in its aggressive spectrum acquisition in the recently concluded auctions.
The company, which has announced extension of high-speed 4G services to eight more circles by March 2017, has also decided to increase the number of towns covered by the fourth generation connectivity to 2,500 by March 2017 from 1,000 announced earlier.
It is offering 4G services in nine circles at present.
Data revenues, which grew 18.8 per cent for the reporting period and now contribute 20.8 per cent of the pie, were one of the biggest growth factors for the company. However, a bulk of the revenue still comes from voice side and such subscribers account for only 69.5 million of its over 200 million base.
In the face of competition posed by the new entrant Reliance Jio, which is offering free voice calls and cheaper data to add subscribers, Sood said pricing will not be a differentiating factor in the long run.
However, Reisten said that in face of the competition, the company has been forced to offer 50-60 per cent more under the same plan.
The overall average revenue per user was at Rs 186 in the second quarter of the fiscal but the voice revenues were impacted by ongoing pressures.
The voice average revenue per minute was at 32.1 paise as against 32.5 paise, Reisten said.
Vodafone's subsidiary mpaisa is confident of meeting the March 2017 deadline for getting the final license for the payments bank, Sood said.
