Vodafone will take a decision on whether to pursue an IPO of its Indian unit sometime next fiscal year, CEO Vittorio Colao has said. Despite regulatory and ongoing tax issues, Vodafone India, the country’s second largest mobile player, saw service revenues increase in H1 fuelled by new customer additions and surging data usage.
Vodafone (LON:VOD) will take a decision on whether to pursue an IPO of its Indian unit sometime next fiscal year, CEO Vittorio Colao has said.
Speaking on a conference call with reporters, Colao (pictured) reiterated that preparations for the potential listing of Vodafone India, the country’s second largest mobile operator with 188.2 million customers, are underway, but did not provide further details.
The UK-based mobile giant confirmed in mid-October that it had started work on the IPO and, shortly afterward, reports stated that it could call for pitches from banks to advise it on the transaction in Q1 2016. Vodafone, which had already hired Rothschild to look into the viability of such a transaction, reportedly wants to see what impact billionaire Mukesh Ambani’s Reliance Jio, set to launch commercially in December, has on the market before deciding whether to move ahead with the listing.
Vodafone has been considering an Indian IPO for several years, but the assumption has been that it would wait until its local tax cases were settled. The operator is one of multiple foreign companies to have faced accusations of underpaying local taxes, but there are now signs that authorities are seeking to make it easier for international firms to do business.
Last month, the Bombay High Court ruled in favour of Vodafone in a £450m (US$690m) tax case covering the treatment of a call centre and share options following its US$10.9bn takeover of Hutchison Essar in 2007.
However, other regulatory cases, including a separate US$2.6bn tax dispute with the government, remain unresolved.
Vodafone posted revenues of £20.3bn for the six months ended 30 September 2015, down 2.3% year-on-year, while service revenues dropped 3.7% to £18.4bn.
In India, an additional 4.4 million customers and demand for 3G data saw service revenues rise by 6.3% to £2.2bn, however this was partly offset by regulatory changes, including mobile termination rate (MTR) cuts, roaming price caps and an increase in service tax.
More specifically, data usage increased 74% year-on-year in H1, while the active data customer base rose 16% to 66.5 million. The 3G customer base was up 75% to 23.8 million and Vodafone said their usage is now similar to that of European customers. The carrier plans to launch 4G in India “in the coming months”.
Vodafone India’s EBITDA grew 6.7% with a 0.1% improvement in the EBITDA margin. The carrier said service revenue growth offset increasing operating costs relating to Project Spring – a two-year investment programme designed to boost the group’s network coverage and quality – higher acquisition costs and the translation effects of non-rupee operating costs.
Vodafone said its mobile wallet business M-Pesa continues to expand and had 665,000 active customers and 97,000 agents as of September 2015. In August, the Reserve Bank of India granted the company approval in principle to set up a payments bank.
