Vodafone continues to reel under pressure from Reliance Jio’s pricing

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Vodafone increased its customer base by 3.3% to 207 million and registered an increase of 600 basis points in its revenue market share to 23.1% in the quarter ended 30 June. Photo: Reuters

New Delhi: Vodafone India Ltd, India’s second-largest telco, on Tuesday said that it has seen decline across all key financial parameters of the company for the April-September period due to continued pressure from new entrant Reliance Jio Infocomm Ltd.

The Mumbai-based company’s service revenue declined 15.8% to Rs19,002 crore; Ebitda (earnings before interest, taxes, depreciation and amortization) declined 39.2% to Rs4,074 crore; and Ebitda margin narrowed 8.2 percentage points to 21.4%, even as the company cut down on capital expenditure by 13% to Rs2,915 crore.

In a statement, the company blamed “continued price competition from new operator and incumbents, seasonality and GST” responsible for its revenues taking a hit.

The numbers have come in the backdrop of pressure easing out on the industry after Reliance Jio started charging customers in April; it has increased tariffs thrice since then, after offering services for free for almost six months.

However, Vodafone increased its customer base by 3.3% to 207 million and registered an increase of 600 basis points in its revenue market share to 23.1% in the quarter ended 30 June. However, it said the company’s service revenue Arpu (average revenue per user) took a beating due to stiff price competition and it now stands at Rs146 per user.

“Amidst continuing intense competition, we recorded a gain of 0.6ppt in RMS in Q1FY18 (YoY) and delivered a stable performance overall. We see signs of positive developments with consolidation of smaller operators. We are making good progress in securing requisite approvals for our merger with Idea Cellular and in monetizing our tower assets. We remain committed to playing our due role in enabling Digital India by fulfilling the evolving needs of increasing volumes, speed and connectivity solutions from both retail and enterprise customers,” Sunil Sood, managing director and chief executive, said in a statement on Tuesday.

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