Tariff war, lower call rates crimp Vodafone’s FY18 revenue by 19%
VODAFONE INDIA’S OPERATING FREE CASH FLOW PLUNGED 59% TO ₹1,214 CRORE
NEW DELHI: Vodafone India’s service revenue for the fiscal year ended March 31 fell 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 ₹34,855 crore in the 12 months ended March 31 from ₹42,956 crore in the pervious 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 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 February 1. 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 standalone tower business to ATC for ₹3,850 crore and said that it is making progress in securing regulatory approvals for its merger with Idea Cellular, which is expected to be completed in June.
Vodafone India’s earnings before interest, tax, depreciation and amortization fell 34% to ₹7,766 crore in 2017-18 from ₹11,784 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 utilisation,” the company said in a statement.
Firm’s operating free cash flow plunged 59% to ₹1,214 crore from ₹2,992 crore in the year. LONDON: Vodafone Group Plc chief executive officer Vittorio Colao is leaving after a decade of retreating from aggressive global growth in favor of the European market, handing the reins to company veteran Nick Read.
Colao, 56, will depart from the world’s second-largest mobile carrier in October and Read, the 53-year-old chief financial officer, will take over. Vodafone made the surprise announcement as it reported earnings and predicted potentially slower growth ahead on competitive pressures in Italy and Spain, causing the stock to drop the most since February.
The Italian executive leaves Read to see through Vodafone’s $22-billion agreement last week to acquire cable assets from Liberty Global Plc, which rounds out Colao’s reshaping of the Newbury, England-based company into a predominantly European carrier. The purchase gives Colao a major expansion for Vodafone, following years of deals to pull out of markets his predecessors pursued for growth.