Vodafone India posted a 15.8% drop in its service revenue at Rs 19,002 crore during the first half of this financial year on the back of continued price competition from Reliance Jio Infocomm (Jio) and incumbents, seasonality and impact of the goods and services tax (GST).
“In India competition remains intense. There are however signs of positive developments in the Indian market, with consolidation of smaller operators and recent price increases from the new entrant,” said Vittorio Colao, CEO of Vodafone Group in the UK based telco’s global release.
The telco that saw a capex investment of Rs 2915 crore in the six months ended September, saw its earnings before income, tax, depreciation and ammortisation (EBIDTA) margins drop to 21.4% from 29.6% when compared on a like to like basis.
“Amidst continuing intense competition, we recorded a gain of 0.6 ppt in RMS (revenue market share) in Q1FY18 (YoY) and delivered a stable performance overall,” said Sunil Sood, Managing Director and CEO, Vodafone India.
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Colao said that the company is making good progress in securing regulatory approvals for its merger with Idea Cellular and in monetising its tower assets. Vodafone India operations had 207.4 million customers at end of September.
The merger between Idea Cellular and Vodafone India is expected to be completed in the first half of the calender year 2018.
Vodafone India and Idea Cellular on Monday said they have agreed to sell the roughly 20,000 towers that they directly own to a local arm of American Tower Corp. for $1.2 billion (Rs 7,850 crore) cash, a move which will help the two merging telcos pare debt while boosting the tower portfolio of the US company in a market seeing massive 4G rollouts. If the sale is completed before the completion of “the proposed merger of Vodafone India and Idea, Vodafone India would receive Rs 3,850 crore ($592 million) while Idea would receive Rs 4,000 crore ($615 million).
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The telco’s average revenue per user stood at Rs 132 in the second quarter compared to Rs 141 in the first quarter of the financial year.
The India operations recorded an operating free cash flow (OFCF) at Rs 1,543 crores in the six months of the financial year, which is a 53.3% drop when compared on a like to like basis. ‘Continuous targeted capital investments and reduced margins due to competitive intensity impacting cash flow,’ said the second largest telco in India.
Net Debt at the end of September was Rs618 billion, including spectrum related payments to the government.