Vodafone India continues to reel under pressure from Reliance Jio’s pricing
New Delhi: Vodafone India Ltd on Tuesday reported a decline on all key financial parameters in the April-September period, as competitive pressure took its toll on India’s second largest telco.
The Mumbai-based company’s service revenue declined 15.8% to Rs19,002 crore; Ebitda, or earnings before interest, taxes, depreciation and amortization, an indicator of operating profitability, fell 39.2% to Rs4,074 crore; and the Ebitda margin narrowed 8.2 percentage points to 21.4%. Vodafone cut capital expenditure by 13% to Rs2,915 crore.
In a statement, the company blamed “continued price competition from new operator and incumbents, seasonality and GST (goods and services tax)” for its revenue taking a hit.
A fierce price war triggered by the entry of Reliance Jio Infocomm Ltd in September last year and heavy spectrum acquisition costs have hit Indian telecom firms. Reliance Jio started charging customers in April after offering its services free for almost six months.
Vodafone increased its customer base by 3.3% to 207 million and registered an increase of 600 basis points in its revenue market share to 23.1% in the quarter ended 30 June. However, it said the company’s service revenue Arpu (average revenue per user) took a beating due to stiff price competition and it now stands at Rs146 per user. One basis point is one-hundredth of a percentage point.
“We see signs of positive developments with consolidation of smaller operators. We are making good progress in securing requisite approvals for our merger with Idea Cellular and in monetizing our tower assets,” Sunil Sood, managing director and chief executive, said in a statement on Tuesday. “We remain committed to playing our due role in enabling Digital India by fulfilling the evolving needs of increasing volumes, speed and connectivity solutions for both retail and enterprise customers.”