Vodafone Group CEO Vittorio Colao (pictured) said a plan to merge its Indian business with Idea Cellular is not a sign the company is exiting the market or backing away from a fight with new entrant Reliance Jio.
Speaking on the company’s fiscal Q3 trading update call (covering the three months to end-December), Colao said the proposed merger with Idea Cellular: “is about creating a much stronger asset and the number one telco in the country, with almost 400 million customers, strong spectrum allocation and the largest network by far.”
Following a €5 billion write-down in its Indian operation last year, Vodafone this week confirmed it was in talks to merge its operations with Idea Cellular following an intense price war sparked by the entry of Jio and its free data deals.
Vodafone India’s service revenue declined 1.9 per cent year-on-year in the October to December period, with overall revenue dipping 5.5 per cent. Vodafone CFO Nick Read said the company retained the “majority” of its higher-value customers in India, with the largest impact of Jio’s competition felt in the middle-tier of its customer-base.
During its investor update, Read told investors to: “Expect India to continue to decelerate during Q4.” He explained the company experienced a “significant reduction in data usage and ARPU” in India, but noted the market dynamics could change when Jio begins charging for its services.
Colao added the company was: “Devoted to finding a solution and are in an excellent position to recover the market when the newcomer starts billing”.
UK results drag on revenue
Vodafone Group reported its fiscal Q3 revenue fell 3.9 per cent year-on-year to €12.3 billion, with service revenue up 1.7 per cent compared to the same period in 2015.
In Europe, revenue declined 4.6 per cent after being dragged down by exchange rate movements. Vodafone UK revenue fell 19 per cent, and service revenue declined 3.2 per cent year-on-year, attributed to competition in Enterprise, lower MVNO revenues and the impact of roaming regulation.
Vodafone’s AMAP revenue fell 2.4 per cent year-on-year, with service revenues rising 3.9 per cent. Turkey, Egypt and Ghana were highlighted as strong growth areas within the region.