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Vodafone Essar posts 9% growth in revenue

Vodafone Essar posts 9% growth in revenue
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First Published: Fri, Jul 22 2011. 10 07 PM IST
Updated: Fri, Jul 22 2011. 10 07 PM IST
New Delhi: Vodafone Group Plc, the world’s largest telecom service provider that operates in nearly 30 countries, has reported the highest growth in quarterly services revenue—about 17%—in its Indian operations.
Vodafone Essar Ltd, its Indian unit, on Friday said overall revenue in the three months ended 30 June gained 9% to £1.03 billion (around Rs7,447 crore), compared with £954 million a year earlier, because of stabilizing service rates and an increase in users.
The company added seven million subscribers in the June quarter to reach 141.5 million. Data revenue grew by around 70% from a year earlier, it said.
“Data customers totalled 26 million, a year-on-year increase of 189%. The growth was driven by the increase in data-enabled handsets and the continued impact of successful marketing campaigns run in conjunction with the sponsorship of key sporting events. Whilst competition in the market remains high, the effective rate per minute is stabilizing as a result of a focus on promotional offers rather than further ongoing price reductions,” the telco said in a statement.
Third-generation (3G) mobile phone services, which were started in February, were available to Vodafone customers in 147 towns and cities at the end of the quarter, it said.
Vodafone has also started work to sell shares of its Indian unit to the public for the first time in the next few months.
“The revenue per minute have remained largely flat while the Ebitda (earnings before interest, tax, depreciation and amortization) margin has fallen slightly due to the 3G expenses coming into the books,” a Mumbai-based analyst with a multinational brokerage firm said on condition of anonymity. “The huge growth in the data business is a significant plus point that signals an optimistic future.”
On the purchase of the Essar Group’s stake in the joint venture, Vodafone said that on 1 July, Essar Communications (Mauritius) Ltd (ECML) and Essar Communications Holdings Ltd (ECHL) agreed to the terms under which the two entities will sell their direct and indirect shareholdings in Vodafone Essar to Vodafone UK.
Under the terms, ECML’s wholly owned subsidiaries Essar Communications Ltd (ECL) and Essar Com Ltd (ECom) have sold their entire 22% shareholding in Vodafone Essar to Vodafone UK, and ECHL will also sell its 11% shareholding in Vodafone Essar.
The total cash outflow from Vodafone, including cash already paid for the first tranche of the shareholding, is expected to be approximately $5.5 billion. This will include a net payment of $3.3 billion for the 22% stake held by ECL and ECom after withholding tax of $900 million.
However, both companies believe there is no tax liability on the transaction, the statement said.
Apart from the above transactions, there is also a payment of $1.3 billion for the remaining 11% stake held by ECHL and the settlement of all shareholder claims, which will be made by 15 February.
At least 1.35% of Vodafone Essar’s shares will be transferred to an Indian investor to ensure compliance with foreign direct investment rules for telecom companies.
shauvik.g@livemint.com
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First Published: Fri, Jul 22 2011. 10 07 PM IST