Vodafone Essar
Published on Wednesday, November 11th, 2009 at 12:23 PMAuthor: insightt95in (169 Articles)
1HFY10 financials/KPIs takeaways
* 3Q09 service revenues dip 1.4% qoq (in INR); in line with the
1.6% qoq wireless revenue dip reported by BRTI: Adjusted for
GBP/INR exchange rate fluctuation, Vodafone’s (VOD) 3Q09 India
revenues (voice + data) stood at Rs53 bn (£656 mn), -1.4% qoq (~6%
lower in GBP). 1HFY10 EBITDA was 24% (down 130 bps from 2HFY09);
EBITDA/min stood at Rs0.17 (vs. Rs0.19/min for BRTI).
* Capex intensity to dip in 2HFY10: VOD stated that capex outlay in
India would drop in 2HFY10 as they move into a ‘managing capacity’
mode; 1HFY10 capex/sales in was 36%, vs. 50% in 2HFY09. As per
VOD, with 89k base stations (84k as of Jun-09), its India footprint now
covers 85% of population in 16 ‘existing VOD’ circles (similar to BRTI’s
coverage) and 39% of population in the 7 ‘new Spacetel’ circles (vs. 65-
75% population coverage by BRTI).
* 6.1% qoq growth in 3Q09 traffic significantly higher than peers:
In comparison to a 1.4%, 2.1% and 3.3% qoq rise in traffic for RCOM,
BRTI and IDEA respectively, VOD-Essar’s 6.1% qoq growth in call traffic
appears impressive, considering that average subs base growth for the
four telcos was in a similar range (8.5-9.7% qoq).
* ARPM drops 7.1% qoq to Rs0.7 in 3Q09; premium to BRTI/IDEA
ARPM still ~25%: In comparison to a 3.7%, 4.1% qoq dip in blended
ARPM for BRTI and IDEA respectively, VOD-Essar’s 7.1% qoq dip in call
traffic appears steep, but not unexpected as proportion of Category C
service area subs (where VOD-Essar is the typically the #5-7 wireless
service provider) progressively rise. VOD-Essar’s ARPM premium to
BRTI/IDEA has shrunk from 33% to 25% over the past four quarters.
* Other highlights from 1HFY10 earnings webcast: [1] 2/3rd of 130
bps sequential EBITDA margin decline in 1HFY10 attributed to coverage
expansion in 7 new service areas where it launched operations between
Aug-08 to Mar-09; remaining dip due to pricing pressure, [2] 2HFY10
margin outlook likely to be weaker as competition expected to remain
vibrant, [3] Network/towerco consolidation already being facilitated as
new operators launch services; [4] The question is ‘when’ rather then
‘whether’ the DoT would alter regulations to advance consolidation
amongst operators, [5] On-net traffic comprises ~60% of total traffic
carried on its network.
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