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Vodafone may skip IPO this yearMay 23, 2012 (Mint - McClatchy-Tribune Information Services via COMTEX) -- Vodafone Group Plc's India unit said on Tuesday it may not go ahead this year with plans for an initial public offering (IPO) of shares because of uncertainty over the rules for the auction and pricing of radio waves. "If we see the Telecom Regulatory Authority of India (Trai) recommendations happen, then it, for sure, would be difficult to do this year," Marten Pieters, managing director and chief executive officer of Vodafone India Ltd, said at a news conference to announce the company's earnings. "We would also need some certainty around the valuation of the business and, of course, pricing and availability of spectrum is a very important issue for every operator," he said. Trai in April proposed that the minimum price for airwaves to be auctioned be set at '18,110.9 crore for 5 megahertz (MHz) of 2G spectrum in the 1,800MHz band across the country. Telecom operators said their business would become unviable and telecom tariffs would soar if Trai's recommendation was accepted. Trai has also proposed refarming, or switching, superior quality spectrum bands of established carriers such as Vodafone India with a relatively inferior band before their permits are renewed starting in 2014. A panel of ministers has the final say on the auction rules. Vodafone has previously talked about plans for an India IPO without setting a definite time frame. The British phone company has been embroiled in a tax dispute with the Indian government over its 2007 purchase of Hutchison Telecommunications International Ltd's Indian business that gave it entry into the rapidly growing mobile phone market. Expressing concern over lack of consistency and predictability in the regulatory environment, Pieters said that despite an average 26MHz being available in each telecom circle, only 5-10MHz had been recommended for auction, potentially creating an artificial scarcity that could distort auction prices. The high spectrum reserve prices recommended by Trai will increase the tariff for consumers by around 34 paise per minute, and the impact in cities such as Mumbai and Delhi can be even greater and consumers will have to pay an additional rupee as tariff, said Pieters, citing consultancy firm PricewaterhouseCoopers's recent report on the impact of Trai's recommendations on the telecom sector. On the earnings front, the Indian unit reported 19.5% growth in revenue for the fiscal year ended 31 March at '32,184 crore. Service revenue in the previous fiscal was '26,937 crore. Ebitda (earnings before interest, taxes, depreciation and amortization) was '8,549 crore, up 21.6% from '7,030 crore in the previous fiscal. "We have had a really good year with a very strong operational performance, continued revenue market share (RMS) growth, and an improvement in margins. Our new circles have performed very well and we now have over 10% RMS in four of the seven circles," Pieters said. The telecom company reported average revenue per user (Arpu) of '180 in the January-March quarter. In terms of mobile number portability, which allows users to switch operators without changing phone numbers, the company added 1.7 million new customers and crossed the 150 million milestone in terms of total customers. "Vodafone's results have beaten market expectations," said Alok Shende, founder director and principal analyst of Ascentius Consulting. "Its Arpu is higher by '80 compared with the industry average and this speaks volumes about the company's marketing strategy and service it is offering to its customers." Reuters contributed to this story. ___ (c)2012 the Mint (New Delhi) Visit the Mint (New Delhi) at www.livemint.com Distributed by MCT Information Services |