Vodafone India FY15 revenue up 12.6%, tax arbitration process delayed

NEW DELHI: Vodafone’s Indian unit outpaced its group counterparts to report 12.6% organic growth in revenue in the year through March, as subscribers used more of its premium data services, even as the basic voice telecom service remained under pressure, like its top rivals.

The Rs 20,000 crore-arbitration process between Vodafone Group and India though is set to be delayed further with the arbitrator appointed by the government – former chief justice of India RC Lahoti – resigning earlier this month. Abdulqawi Ahmed Yusuf, vice-president of the International Court of Justice, who was being proposed as the third arbitrator by Vodafone and India, has also declined to take up the position. Vodafone has named Canadian trial lawyer Yves Fortier as its arbitrator.

“There is now likely to be a delay in appointing the chairman pending the Indian Government appointing a replacement for its party-appointed arbitrator. If there is no subsequent agreement on appointment of a chairman, the International Court of Justice will appoint the third arbitrator,” Vodafone said in a statement.

Vodafone India though continued its strong operational performance, led by data growth.

Organic service revenue, which takes out items like handset sales and forex fluctuations, at the local unit of UK’s Vodafone Group rose to £4.31 billion (Rs 42,772.4 crore). In the January-March quarter, its organic service revenue grew 12.1%.

At the current rate, the India unit contributes over 10% of the parent’s revenue. The company is ranked No. 2 in India, with 183.8 million subscribers, which is the most Vodafone Group has in any country.

“Voice yields were relatively flat after a period of improvement, but we saw a decline in average minutes of use in H2 as competition increased in some circles,” Vodafone said in a statement, referring to India.

“Customer demand for data services has been very strong. Total data usage grew 86% year-on-year, with the active data customer base increasing 23% to 64 million,” it added.

Globally, Vodafone’s service revenue in the past year rose 9.4% to £38.5 billion.

“It has been a year of continued progress, culminating with a return to organic growth in Q4. We have seen increasing signs of stabilisation in many of our European markets, supported by improvements in our commercial execution and very strong demand for data,” Vittorio Colao, Group Chief Executive, said in the statement.

For India, EBITDA grew 16.3%, with a 0.9 percentage point improvement in EBITDA margin as economies of scale from growing service revenue were partly offset by the increase in operating costs related to the expenditure on building and expanding networks and higher spectrum acquisition costs.

In March, Vodafone won spectrum in 12 telecom circles for a total cost of nearly INR 26,000 crore, including airwaves in all six of its 900 MHz circles due for extension in December 2015.

It also won new 3G spectrum in seven circles, which will allow it to address 88% of its revenue base with 3G services, the company said.