Jio, GST pull down Voda H1 numbers
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).