STIFF COMPETITION FROM RELIANCE JIO HURTS VODAFONE’S FINANCES TOO

Reliance Jio has badly hurt finances of all major incumbent players. After Bharti Airtel and Idea Cellular, Vodafone India has also reported losses in last fiscal. blaming ‘heavy competition’ in Indian cellular market for it…

NEW DELHI, MAY 17, 2017: Telecom player Vodafone India has reported a 10.2 per cent dip in fiscal year 2016-17 operating profit at Rs.11,784 crore, amidst heavy competition triggered by Reliance Jio.

The revenues on a standalone basis declined 0.6 per cent to Rs.43,095 crore, while the margin contracted by nearly three percentage points to 27.2 per cent.

The data usage grew by almost 30% on year-on-year basis. With a growth of 5% year-on-year, Vodafone India’s data (browsing) revenue stood at Rs.8,467 crores in FY17.

Vodafone’s Managing Director and Chief Executive Officer Sunil Sood said, “Amidst an unprecedented and intensely competitive environment, we delivered a stable performance.”

In March, Vodafone India has already announced its merger with Idea Cellular to create the country’s largest telecom player. Following the merger announcement, Vodafone said there will be a partial reversal of impairment reducing the charge to net €3.7 billion. In the first quarter in which the India business was deconsolidated, service revenue at the local business fell nearly 7% sequentially.

“The slowdown in Q4, as expected, was due to the ongoing impact of free services, which dragged on data and voice pricing, compounded by the leap year benefit in the prior period,” Vodafone said. The local operations weighed on the performance of the group, which posted a loss of $6.3 billion for March ended fiscal year, dragged by the impairment charge charge of 3.7 billion net of tax.

The average revenue per user (ARPU) in the fiscal fourth quarter to Rs.158 from Rs.174 in the third, with data browsing revenue falling a sharp 16% compared to a 0.6% gain in the third quarter.  “(Data) unit prices declined 38% year-on-year, although this helped to stimulate 40% growth in monthly data usage per 3G/4G customer,” the company said.


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