Vodafone strikes operating profit in India, revenue up 16%

Vodafone Essar, the Indian unit of the world’s biggest telecom company Vodafone, has moved from an operating loss to an operating profit during the year ended March.

Announcing its global results in London today, the Group said that it made a profit of 15 million British Pounds (Rs 110 crore) after accounting for operating and depreciation costs, but before tax and interest charges, if any. The figure reflects only 67% of the total number for Vodafone Essar in India as Vodafone still, technically, held only 675 stake in the company. It bought the remaining 33% towards on 31 March.

In comparison, in the year 2009-10, the Indian operation had a net operating loss of 37 million.

Unlike peers like Reliance Communications, Vodafone continued to put money into creating capital assets — towers and networks — as its total capex went from 853 million Pounds to 870 million last year.

India, which accounted for 12.5 crore out of its total 34 crore subscribers, saw the highest ‘churn’ rate of 51%, compared to 37.6% in its home market of Britain. The number indicates that 51% of its subscribers leave its network within a year.

Organic revenue grew 16.2% to reach around 3.86 billion Pounds (Rs 28,200 crore) during the year, much higher than the 3.2% increase reported for the Group as a whole. India contributed around 8.5% of the Group’s revenues from around 7% during the year before.

India was the only big market, except Africa, where voice revenues increased. In UK, Germany, Italy and Spain, they declined substantially due to the commoditization of the voice market. In India, they increased from 692 million Pounds during the first quarter of 2010 to 781 million during the quarter ended March 2011 and was higher than those of the other countries except Germany.

Data revenues grew from 44 million Pounds to 72 million Pounds even as 15 lakh Vodafone subscribers had activated 3G on their phones in India by end of March.


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