Jio, GST pull down Voda H1 num­bers

Financial Chronicle - - COMPANIES -

AF­TER Air­tel and Idea, Voda­fone In­dia on Tues­day posted a huge 39.2 per cent dip in pre-tax profit at Rs 4,075 crore for the six months to Septem­ber while its rev­enue fell 15.8 per cent to Rs 19,002 crore due to the fierce com­pe­ti­tion (Jio), higher GST rates and sea­son­al­ity.

The com­pany had raked in Rs 22,579 crore in rev­enues and an op­er­a­tional profit of Rs 6,704 crore a in the first half of last year, a pe­riod when GST and Jio were not there.

Its earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and am­mor­ti­sa­tion (Ebitda) mar­gins dropped to 21.4 per cent in H1 from 29.6 per cent in the year-ago pe­riod. Its av­er­age rev­enue per user (Arpu) was im­pacted by the low busi­ness fac­tors, which dragged it down to Rs 146 in the sec­ond quar­ter.

Quite nat­u­rally, Voda­fone blamed con­tin­u­ing price com­pe­ti­tion from Jio In­fo­comm and other in­cum­bents, sea­son­al­ity and higher GST rate as the rea­sons for the de­cline in rev­enue and op­er­a­tional prof­its.

Its global CEO Vit­to­rio Co­lao feels this could be the last quar­ter with such re­sults and Jio’s de­ci­sion to raise tar­iffs, in nor­mal mar­ket be­hav­iour, would cre­ate some level-play­ing in com­pe­ti­tion.

“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 Co­lao, CEO of Voda­fone Group in the UK-based telco’s global re­lease.

But there were silver lin­ings as per Voda­fone man­age­ment.

“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.

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 telco made capex of of Rs 2,915 crore in the six months ended Septem­ber,

On Mon­day, Voda­fone In­dia and Idea Cel­lu­lar said they have agreed to sell the roughly 20,000 tow­ers that they own to a lo­cal arm of Amer­i­can Tower Corp for $1.2 bil­lion (Rs 7,850 crore). This can help the two merg­ing tel­cos pare debt. If the sale is com­pleted be­fore the com­ple­tion of the merger of Voda­fone In­dia and Idea, Voda­fone In­dia would re­ceive Rs 3,850 crore ($592m) while Idea would re­ceive Rs 4,000 crore ($615m).

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