Why Is Vodafone India’s Performance Slowing Down?



Vodafone’s service revenue in India

India (EPI) is an area of concern for Vodafone Group (VOD), given Reliance Jio’s launch in September 2016, because bundled pricing tends to undermine voice revenues, while introductory free offers are hard to deal with in the near term. As expected, Vodafone India’s service revenue growth slowed in fiscal 1H17.

Vodafone’s revenues in India fell ~2.3% YoY (year-over-year) to ~3 billion euros (about $3.13 billion) in fiscal 1H17, driven by lower data revenue growth and increased competition. During fiscal 1H17 earnings conference call, Vodafone claimed that in India, it had performed similarly to its two major established rivals, Bharti Airtel and Idea Cellular.

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Organic change

Excluding currency and merger and acquisition impacts, the telecom company’s revenue in India rose ~5.8% YoY in fiscal 1H17. Organically, the service revenue in India rose ~5.9% YoY during the period.

Vodafone India’s EBITDA (earnings before interest, tax, depreciation, and amortization) margin fell to 29.6% in fiscal 1H17 from 29.7% in fiscal 1H16. This decrease was due to higher network and customer acquisitions costs, which were offset by operating cost savings.

Mobile customer metrics in India

Vodafone India’s mobile customers were ~200.7 million at the end of fiscal 1H17. In fiscal 2Q17 on a net basis, the company added around 692,000 contract customers in this geography. The company’s prepaid additions of customers were 646,000 in India during fiscal 2Q17.


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