Voda In­dia Posts First-ever Profit at 13,399 crore

Dis­count cuts, call rate hikes help boost co’s fi­nan­cial show

The Economic Times - - Companies - OUR BUREAU

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.

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