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Vodafone India cash positive, revenues up 26% in Q1
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Vodafone Essar, the second-largest mobile operator in India (in terms of market share and subscriber numbers) on Friday said that its Indian operations are now cash positive.

“These are the first quarterly results to show service revenue growth since the global recession. Our Indian operations are now cash positive at an operating level,” said Vittorio Colao, CEO, Vodafone Group.

The group's revenues from Indian operations have increased 26.4% to £954 million (Rs 6,868 crore) in the first quarter of 2010-11, compared with £755 million (Rs 5,436 crore) in same quarter last year. In organic terms, revenue for the June has risen 13.7%, including a 1.5% benefit from Indus Towers, representing an improvement on the previous quarter.

“Our operational actions following last year’s significant price declines have been successful and we are now seeing minutes return to operators with strong brands and performing networks,” said Colao.

Voice revenues were at £775 million, compared with £632 million last year. Its messaging revenue increased from £22 million to £39 million.

Put option agreement with Essar revised

Vodafone has revised its agreement with Indian partner Essar and will additionally pay Rs 3,400 crore over and above the fair market value, if Essar exercises the put option for its 33% stake in the company.

The revision is based on the additional debt that the firm has taken to buy 3G spectrum at Rs 11,600 crore. This is expected to reduce the fair market value.

“This amount is payable in the event that Essar exercises its put option to sell some or all of its Vodafone Essar Ltd shares at fair market value, provided that the maximum aggregate amount payable shall not exceed $5 billion (around Rs 23,500 crore). This additional amount is not payable if Essar decides to sell its 33% shareholding in Vodafone Essar Ltd at the underwritten value of $5 billion.” Essar can exercise the put option till May 2011.

If Essar decides to sell out to Vodafone, then it gets a pre-determined$5 billion, irrespective of the prevailing market price. The second option says if Essar decides to sell its shares worth between $1 billion and $5 billion to Vodafone, then the valuation will be 'independently appraisedbased on the fair market price. If Essar opts for the second option, then post the independent valuation to determine the fair market value, it will get an additional Rs 3,400 crore (£510 million) as a top-up.

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