Displaying items by tag: Idea Cellular

Vodafone India struggles with ‘intense price competition’

Written on Sunday, 11 February 2018 09:46

Vodafone Group’s financial results for the quarter ended 31 December 2017 show a 3.6% decline year-on-year to €11.8 billion, due mostly to the removal of figures relating to its Netherlands Vodafone Ziggo joint venture from overall earnings. The company’s India unit was heavily affected by “intense price competition” and new regulation on termination fees.

Although India is excluded from Vodafone Group’s overall figures, the company’s pending merger with Indian operator Idea Cellular means it continues to provide updates for the unit. Vodafone India’s revenue in fiscal Q3 declined 26.6% year-on-year to €1.1 billion.

However, Vodafone Group CEO Vittorio Colao said the regulatory process for the Idea Cellular merger was going well and should be complete in the first half of 2018.

On 20 March 2017, Vodafone announced an agreement to combine its subsidiary, Vodafone India (excluding its 42% stake in Indus Towers), with Idea Cellular. The combined company will be jointly controlled by Vodafone and the Aditya Birla Group.

Service revenue declined 23.1% for Vodafone India as a result of intense price competition, Vodafone Group reported, which continued during Q3 as the Indian market leader increased the competitiveness of its tariffs despite price rises announced by the new entrant Reliance Jio.

This was exacerbated by a 29.2% decline in interconnection revenues following a MTR (mobile termination rates) cut on 1 October. Excluding the impact of regulation, service revenue declined by 14.2%. On a sequential basis, local currency service revenues excluding regulation declined 1.5% quarter-on-quarter.

“While the competitive and regulatory environment in India remains intense, we continue to make good progress in securing the required approvals for the merger with Idea Cellular,” said Colao, “and we have taken steps to strengthen the combined company’s financial position.”

Published in Telecom Operators

Nokia to help India’s Idea Cellular meet bandwidth demand

Written on Monday, 02 October 2017 07:00

Nokia said will help Indian telecom provider Idea Cellular meet ever-increasing bandwidth demand by deploying Nokia's 1830 Photonic Services Switch (PSS) based Wavelength Division Multiplexing (WDM) solution.

The optical transport network solution will be implemented across fiber-constrained geographies on the Idea network in India. Once the technology is deployed, Idea will be able to provide high-bandwidth services to its subscribers.

"With the roll-out of Idea's pan-India wireless broadband network in the last one year, we have witnessed massive data growth leading to high bandwidth demand,” said Anil Tandan, Chief Technology Officer, at Idea Cellular. “We have a long standing partnership with Nokia and we are confident that Nokia will bring the same expertise and commitment in deploying optical network as it does in Radio, Core and IP domains.”

Nokia's 1830 Photonic Services Switch allows service providers to extend reach by providing a cost-effective alternative to expensive fiber. The solution will be strategically deployed in fast-growing areas to allow Idea to offer high-bandwidth services to its subscribers without worrying about the added load on the network.

Nokia WDM helps in creating a new access layer, is easily scalable and ensures optimized power consumption and space utilization. The new transport network will also be able to support the increased demand in the future.

“Through a combination of new operator offerings, aggressive data plans and continued mass adoption of smartphones, India has witnessed unprecedented data usage growth since the beginning of 2017,” said Nitin Dahiya, Head of Customer Team - Idea, at Nokia. “We are delighted to be working with Idea to deploy an optical transport network that will help address the high-bandwidth data demands of its customers.”

Published in Telecom Vendors

British telecommunications giant Vodafone reported on Tuesday, May 16, an annual net loss of 6.3 billion euros ($6.9 billion) after slashing the value of its troubled Indian division.

The performance in the 12 months to March compared with a net loss of 5.4 billion euros in the previous financial year, Vodafone said in a statement. Revenues declined 4.4 percent to 47.6 billion euros. At the same time, operating profit excluding exceptional items almost tripled to 3.7 billion euros on the back of a painful cost-cutting drive.

In the first half of the year, Vodafone initially took a non-cash impairment of 5.0 billion euros on its Indian activities and blamed a sharp increase in competition. However, in March, Vodafone announced the merger of its Indian unit with Idea Cellular in order to create India's largest telecoms operator and fight ultra-competitive new player Reliance Jio.

Following the deal, Vodafone added Tuesday it had partially reversed the Indian impairment -- but it still stood at 3.7 billion euros over the year.

Published in Telecom Operators

British telecommunications giant Vodafone has given the green light to its Indian unit to merge with Idea Cellular in order to create India’s largest telecoms operator. The merger has been made out of necessity following the emergence of 4G newcomer Reliance Jio.

Reliance Jio has disrupted the competitive Indian telecommunications market since it entered the sector in September, 2016. The company which is owned by India’s richest man, Mukesh Ambani - announced its arrival in emphatic fashion by offering vastly cheaper data packages and free voice calls for life. That subsequently led Norwegian operator Telenor to see its operations in India to Bharti Airtel.

The merger between Vodafone India and Idea Cellular has been touted for a number of months now – but it was officially confirmed by both organizations in a joint statement which was released to the Bombay Stock Exchange (BSE). The statement read, “Vodafone Group Plc and Idea Cellular today announced that they have reached an agreement to combine their operations in India. The combined company would become the leading communications provider in India with almost 400 million customers, 35 percent customer market share and 41 percent revenue market share.”

Following the merger, shares prices In Idea have rose by almost 4% in Mumbai – the partnership between Idea and Vodafone will now ensure it overtakes Bharti Airtel as India’s largest telecoms operator.  It’s believed that Vodafone will hold 45.1% of the merged entity – while Idea will have 26%.

According to reports from Bloomberg the merger will be worth around $23.2 billion based on the combined enterprise value of both organizations. It has also been disclosed that both companies will nominate three directors each in order to form a board.

Global brokerage firm CLSA has estimated that the Vodafone-Idea tie-up would command a revenue market share of 43 percent by the start of the 2019 financial year ahead of Airtel on 33 percent. Jio would have 13 percent.

The combination of Vodafone India and Idea will create a new champion of Digital India founded with a long-term commitment and vision to bring world class 4G networks to villages, towns and cities across India," Vodafone Group chief executive Vittorio Colao said in the statement.

Published in Telecom Operators

Vodafone confirmed that it has entered into merger negotiations with Idea Cellular in a move that could result in the creation of the largest telecoms company in India. The announcement has ended months of speculation in relation to the two operators entering a partnership agreement in an effort to fend off Reliance Jio.

Its emergence into the market has had a significant impact in what is already a saturated and ultra-competitive mobile network market. The confirmation of the negotiations has a huge impact on trading with idea shares, rocketing by a whopping 26% on the Bombay Stock Exchange (BSE).

Vodafone India issued a statement and declared that there is no certainty any agreement will be reached between the two operators, but conceded if it did, that it would result in the de-consolidating of Vodafone India.

The statement said: “Vodafone confirms that it is in discussions with the Aditya Birla Group about an all share merger of Vodafone India (excluding Vodafone's 42% stake in Indus Towers) and Idea. Any merger would be affected through the issue of new shares in Idea to Vodafone and would result in Vodafone de-consolidating Vodafone India. There is no certainty that any transaction will be agreed, nor as to the terms or timing of any transaction.

Some analysts have suggested that a merger between Vodafone India and the Mumbai-based Idea Cellular would effectively turn India lucrative multi-billion dollar telecommunications market on its head.  The group of analysts has estimated that the pair would command a combined revenue market share of 43 percent, ahead of rival Bharti Airtel, which would hold 33 percent.

Reliance Jio, has enjoyed great success since its inception last year – and the company is owned by India’s richest man, Mukesh Ambani who would have 13% according to some analysts who have carried out research into the proposed merger.

In September, the 4G Jio network launched an audacious free service for the remainder of the year. In addition to this it offered customers considerably cheaper data plans and free voice calls for life. That forced the hand of its rivals – and they responded by dramatically reducing their tariffs. It forced them to dig deep to compete with Jio who is heavily financed by India’s wealthy energy-to-chemicals conglomerate Reliance Industries.

Published in Telecom Operators

Competition in India’s telco sector has intensified since Reliance Jio was launched into the market in September 2016, adding 52 million subscribers in its first three months of operation. A report by a UK newspaper indicated that Vodafone India and Idea Cellular were seeking a merging with Reliance Jio. But the story has been denied by sources in a report by the Hindustan Times.

The newspaper’s sources said India’s current spectrum holding limits and revenue market share caps both indicate that a merger is not likely. A source from Idea Cellular was also noted in the newspaper article as denying that the company was in talks with Reliance Jio.

Competition in India’s telco sector has grown fierce since Reliance Jio entered the scene after it took a large share of the market from its competitors. The new provider of telecom services offered a range of attractive free services to customers to reel them in, which then lead to Reliance Jio’s competitors – including Bharti Airtel, Vodafone and Idea Cellular – to reduce the price of their offerings to match.

Vodafone Group responded to the threat by investing in its India unit last year, which included a payment to reduce its debt and also increase its 4G spectrum holding at an October auction. The company announced in November that its revenues in India had increased in its fiscal H1 (which covers the period to end-March). Vodafone also confirmed its plans to proceed with an IPO of its Indian unit “as soon as market conditions allow.”

Published in Telecom Operators