Voda India Posts First-ever Profit at 13,399 crore
Discount cuts, call rate hikes help boost co’s financial show
Vodafone India posted its first-ever net profit since entering the country in 2007, as it benefited from reduced competition in fiscal 2014, which allowed it to cut discounts and raise effective call rates while data usage surged, underlining a broad recovery in the beleaguered telecom sector.
For the full year ended March 2014, operating profit for the local unit of UK’s Vodafone Group grew 26% yearon-year to .` 13,398.6 crore. On an organic basis, India service revenue increased 13% to .` 37,606 crore, “as the growing customer base used greater quantities of voice”, Vodafone said in a statement. Organic service revenue strips out items such as handset sales, currency movements and acquisitions.
Vodafone India was the leading market for the group by organic growth during the year, even as its European business declined 9.1%, dragging overall Group revenue down 4.3%.
“The group’s emerging markets businesses have performed strongly throughout the year: we have executed our strategy well and have successfully positioned ourselves for the rapid growth in data we are now witnessing,” Vittorio Colao, Group chief executive, said in a statement.
He added that the Group continued to face competitive, regulatory and macroeconomic pressures in Europe. Its steps to improve its commercial performance, particularly in Germany and Italy, are beginning to see “encouraging early signs”.
Over the last three quarters, the Indian telecom industry has benefited from reduced competition that has allowed operators to raise effective call rates by reducing free minutes on calls, apart from increasing usage of data ser-
Over the last three quarters, the Indian telecom company has benefited from reduced competition
vices, amid higher a surge in smartphone sales. This trend continues, helping operators improve their key parameters such as average revenue per user. Vodafone India's main rivals, market leader Bharti Airtel and Idea Cellular also reported strong profit growth in the fourth quarter, thanks mainly to higher call rates and data usage. On an organic basis, Vodafone recorded a 3.1 percentage point on year increase in EBITDA margin to 31.8% last fiscal year, driven by higher data revenue, higher call rates, scale benefits and significant focus on cost efficiencies, the company said. Its yearly average revenue per user (ARPU) expanded 8.8% on year, average revenue per minute increased 6.2% while total minutes of usage per user grew 2.5%.Data usage grew 125% during the year, primarily resulting from a 39% increase in mobile internet users and a 67% increase in usage per customer, Vodafone said. At on March 31, active data customers totalled 52 million, including seven million 3G customers.