Vodafone India posts Rs9,805 crore operating profit for 2017-18
Lower interconnection usage fees, international call termination charges take a toll on Vodafone’s earnings
New Delhi: Vodafone India’s service revenue for the fiscal year ended 31 March declined 19% because of a bruising tariff war triggered by the entry of Reliance Jio Infocomm Ltd and as the telecom regulator slashed call termination charges.
Service revenue fell to Rs34,855 crore in the 12 months ended 31 March from Rs42,956 crore in the previous year, Vodafone India said in a statement on Tuesday.
“Operationally, it was an extremely challenging year wherein industry revenues were adversely impacted due to a reduction in interconnection usage charges, international termination charges and continuing suppressed pricing,” said Sunil Sood, managing director and chief executive officer of Vodafone India.
Telecom operators, already reeling from a fierce price war that started with the entry of Reliance Jio in September 2016, were hit in the December quarter after the telecom regulator decided to more than halve the interconnect usage charge (IUC) levied by them for handling incoming calls from rival networks.
Later, in another blow to operators, the regulator also cut the international call termination charge from 53 paise a minute to 30 paise a minute, effective 1 February.
The termination charge is payable by an international long distance operator to the Indian telecom operator on whose network an overseas call terminates.
Vodafone India has completed the sale of its stand-alone tower business to ATC for Rs3,850 crore and said that it is making progress in securing regulatory approvals for its merger with Idea Cellular Ltd, which is expected to be completed next month.
Vodafone India’s earnings before interest, tax, depreciation and amortization, or Ebitda, fell 34% to Rs7,766 crore in 2017-18 from Rs11,784 crore in the previous year.
“This reflected lower revenues, partially offset by significant cost actions and a provision release in the fourth quarter following positive legal judgements. These cost initiatives included active network site sharing, the renegotiation of tower maintenance contracts and the closure of sites with low utilization,” the company said in a statement.
Vodafone India’s operating free cash flow plunged 59% to Rs1,214 crore from Rs2,992 crore in the year.
“Continued targeted capital investments and reduced margins due to competitive intensity impacted cash flow,” the statement said.
Average revenue per user (Arpu) for the March quarter was Rs119, as consumption shifted to deeply discounted bundled plans. Its Arpu for the December quarter was Rs146. Rival Reliance Jio recorded an Arpu of Rs137 and Airtel Rs116 for the March quarter.
Net debt of Vodafone India was Rs62,100 crore at the end of March.
The board of Vodafone Group on Tuesday also announced that effective 1 October, group chief financial officer Nick Read would take over as group chief executive officer from Vittorio Colao.