Vodafone India’s 1QFY14 results appear to have benefited from a stable competitive environment in India, with revenues growing 7.8% QoQ and voice ARPMs rising. Indeed, the growth in voice realizations were the highlight, which is likely to increase gradually. Vodafone’s India revenues increased 7.8% QoQ to Rs94bn (excluding Indus revenues) underpinned by a strong growth in voice and data revenues in 1QFY14. Voice revenue growth (including messaging revenues; change in reporting by Vodafone) increased 7.4% QoQ whilst data revenues increased 17.6% QoQ.
Revenue growth during the quarter was led by both, higher realisations and increased network traffic. Data revenues continue to outperform with increased usage and higher penetration. MoUs expanded by 0.5% QoQ in 1QFY14. That said, MoUs tend to contract in 2Q due to seasonal weakness from the rural markets. Resultant network traffic increased by 3.0% QoQ for Vodafone in 1QFY14.
Vodafone’s subscriber base increased 1.8% QoQ to 155mn during the quarter. Lower rotational churn combined with the exit of certain operators are likely to have aided the growth in the subscriber base. We have factored in a subscriber base growth of 1.0% QoQ for Bharti and 2.5% QoQ for Idea during 1QFY14 (please refer to the exhibit below for our headline estimates).
Vodafone Mobile Data revenues increased 17.6% QoQ due to: (1) 10.5% QoQ growth in data subscribers, and (2) 26.7% QoQ increase in data traffic. Data ARPU improved by 5.4% QoQ largely due to increased usage per subscriber.
Given that Airtel’s subscriber growth over the past year has largely been derived from the frontier markets, we anticipate Airtel’s realisation growth to be lower than the other incumbents.