Vodafone reports $4.2 bn operating loss in FY17
TAKING A HIT Vodafone’s earnings have been hit by the entry of Reliance Jio
Vodafone India, the country’s second largest telecom operator, reported a $4.2 billion operating loss in fiscal 2017 as its UK parent wrote down the value of its investments, citing intense competition after Reliance Jio Infocomm Ltd offered free services for more than six months, since it started services in September 2016.
The operator’s India service revenue declined 4.9% to €5.83 billion in 2017, from €6.14 billion in the previous 12 months, parent Vodafone Group Plc said in a statement on Tuesday.
Vodafone Group reported the financial results of the Indian unit as part of its earnings statement. It does not disclose profit or loss of the local unit at the net level.
In March, Vodafone Group agreed to merge its local unit with Aditya Birla Group’s Idea Cellular Ltd to take on Reliance Jio, backed by India’s richest man, billionaire Mukesh Ambani.
Vodafone Group will own 45.1% in the merged unit after selling a 4.9% stake to billionaire Kumar Mangalam Birla’s Aditya Birla Group. The group will initially own 26% in the combined company, with the right to buy additional shares to equalise its stake.
“The proposed merger of Vodafone India and Idea Cellular will create a new champion for Digital India, while capturing synergies with an estimated net present value of $10 billion,” Vittorio Colao, chief executive of Vodafone group, said in the statement.
Vodafone Group booked a non-cash impairment charge of €5 billion in the first half of 2017 relating to its Indian business, reflecting lower projected cash flows “as a result of increased competition in the market”, the company said.
Part of the charge was reversed following the merger announcement of Vodafone India with Idea Cellular. As a result, the impairment charge for the full year reduced to €3.7 billion, the company said.
Vodafone India and rivals including Bharti Airtel Ltd, India’s largest telecom operator, were forced to slash tariffs to retain customers following the entry of Reliance Jio.
Vodafone India’s net debt as of March 31, 2017, was €8.7 billion, including €7.1 billion of spectrum-related liabilities.
Vodafone India added 10 million 3G/4G customers during 2017 and introduced 4G services in all 18 circles where it had acquired 4G spectrum, the company said.
Vodafone India’s data browsing revenue declined by 16% in the quarter ended December 31 compared to a 0.6% growth in the preceding three months. Still, its active data customer base rose to 66.9 million in the December quarter from 65 million in the preceding quarter. Vodafone said unit prices declined 38% in the fourth quarter from a year earlier. That stimulated 40% growth in monthly data usage per 3G/4G customer to 636MB.
Voice revenue declined 13% in the fourth quarter of 2017 because of a 22% decline in voice prices from a year earlier. Total mobile customers increased 4.4 million in the last quarter of 2017, to a total of 209 million.
Punjab National Bank on Tuesday said it reported a net profit of ₹261.90 crore in the March quarter against a loss of ₹5,367.14 crore from a year ago due to lower provisions, higher net interest and other income. According to estimates of 22
analysts, the bank was expected to post a net profit of ₹447.10 crore.
Net interest income, or the core income a bank earns by giving loans, rose 33.09% to ₹3,683.52 crore from ₹2,767.71 crore in the year-ago period. Non-interest income surged 68.16% to ₹3,102.80 crore from ₹1,845.18 crore in the same period last year.
Provisions fell 41.8% from a year ago to ₹5,753.51 crore from ₹9,878.25 crore. It reported provisions of ₹2,562.19 crore a quarter ago.
Gross non-performing assets (NPAs) fell 0.8% to ₹55,370.45 crore at the end of the March quarter from ₹55,818.33 crore a year ago. The bank reported gross NPA of ₹55,627.51 crore a quarter ago.
As a percentage of total loans, gross NPAs stood at 12.53% at the end of the March quarter compared with 13.7% in the previous quarter and 12.9% in the yearago quarter. Net NPAs were at 7.81% compared with 9.09% in the previous quarter and 8.61% in the same quarter last year.
Deposits grew 12.4% year-onyear to ₹621.70 billion, while advances rose marginally 1.7% to ₹419.49 billion.
Shares of PNB closed up 4.55% at ₹174.55 apiece on the BSE, while India’s benchmark Sensex index rose 0.86% to 30,582.60 points.