Displaying items by tag: Vodafone India
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.”
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.
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.
India’s second largest telecom operator has been forced to restructure its management team following the departures of a number of key executives from the organization. Some industry analysts have suggested the emergence and impact of 4G start-up Reliance Jio was the main reason behind the restructuring process.
The former CEO of Vodafone Czech Republic, Balesh Sharma has been appointed COO of Vodafone India’s commercial and enterprise units, replacing Naveen Chopra who held this position for a period of two years. He will remain with the company and is expected to be named in a new role soon.
Representatives of Vodafone India have played down the significance of the restructuring – and dismissed suggestions that the reshuffle was a reactive measure taken due to rival Reliance Jio extending its free voice and data offers.
A spokesman for Vodafone India stated it was ‘business as usual’ and the purpose of the restructuring was in order to make decisions faster and integrate its commercial strategy with operational teams in a much more effective manner.
Other high-profile changes within the company will see Head of M-Pesa, Suresh Sethi – the figure behind its payment bank initiative is expected to depart soon– while the telecom operator named Rahul Bhagat as an adviser. Ravi Santhanam, who was in charge of customer value management, a role that reported to the CMO, resigned.
The entry of Reliance Jio to the market in India has forced the country’s top three mobile players, Bharit Airtel, Vodafone and Idea Celluar to follow Jio’s lead with generous free voice and data offers, which subsequently sparked a price war in the region.
Reports emerged last week that Vodafone Group had entered merger negotiations with its rival Idea in a bid to fend off and combat the increased competition in the hugely competitive market.
Vodafone CEO Vittorio Colao said a plan to merge its Indian business with Idea is not a sign the company is exiting the market or backing away from a fight with Jio.
However, Vodafone India isn’t the only player looking to gain scale via a merger. It has been reported that Telenor India has expressed its interest in exploring a merger through a share swap with Aircel and Reliance Communications, which are themselves trying to merge to create the country’s third largest operator.
British telecoms giant Vodafone reported that its annual earnings would probably be low in India due to high competition and difficulties, but it remains confident about its performance in both Europe and Africa.
In a statement, Vodafone said that underlying profit – as measured by earnings before interest, taxes, depreciation and amortization (EBITDA) – would be lesser than its prior guidance of between 15.7-16.1 billion euros (around $17 billion).
“We anticipate intense competitive pressure in India in the fourth quarter and are taking a series of commercial actions,” said chief executive Vittorio Colao, which includes expansion of 4G network technology. “Our overall performance in Europe and Africa remained strong during the third quarter, reflecting good execution,” he added. “In Europe, service revenue growth continued, led by Italy, Germany and Span.”
However, India remains a struggle for Vodafone because of challenging trade. The company booked a vast 6.4-billion-euro impairment charge on its investment for the first half of the current financial year, AFP reported.
Vodafone recently announced it was in talks to merge its Indian unit with Idea Cellular in a bid to create the largest telecoms company in India. 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.”
Vodafone’s revelation of the merger discussion ended months of speculation that the two operators were exploring the idea of aligning to fend off Reliance Jio, the company whose recent arrival in India shook up the country’s competitive mobile network market.
Reliance Jio, owned by India’s wealthiest national, began operations with great anticipation from the public last year. The 4G Jio network launched in September with an audacious free service for the rest of 2016, followed by vastly cheaper data plans and free voice calls for life.
Reliance Jio’s introduction forced its rivals to follow suit and slash their tariffs and left them struggling to match the deep pockets of Jio, which is backed by India’s extremely wealthy energy-to-chemicals conglomerate Reliance Industries.
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.
Vodafone India have announced that they will provide customers with another free increase in 4G data allowances in an attempt to defend its customer base as a ‘price war’ ensues in the country.
A report published by The Economic Times suggest that Vodafone India is preparing to offer customers four-times the data allowance currently provided on many of its 4G plans. This is the latest in a number of marketing gimmicks by the company in an effort to stem off competition from rival competitors.
In January, the operator began selling a ‘super-hour’ of unlimited data for a set price. This was an extremely popular promotion, but it sparked a reaction from other operators and it has subsequently led to what industry analysts have described as a ‘price war’ following the emergence and launch of new entrant Reliance Jio.
At their launch, Reliance Jio declared it would offer free calls, messaging and data to new customers until the end of 2016, with domestic calls remaining free after the expiry of the initial deal.
After adding 600,000 customers per day in its first three months of operation, the free offer was extended until the end of March, but capacity issues mean customers are limited to 1GB high speed 4G before having their data rate reduced.
In response, India’s three largest operators – Bharti Airtel, Vodafone and Idea Cellular – began offering free additional data on selected plans. Airtel provided customers upgrading to a new 4G handset 3GB of free data per month for the first year of their contract, while Idea boosted existing customer allowances with additional free monthly data. Prior to its January offers, Vodafone had doubled its data allowances on some tariffs.
However, this ‘price war’ is having a severe impact on Vodafone’s financial performance. The company was forced to write down the value of its Indian unit by €5 billion due to the increased and intense competition. Vodafone India also took the decision to put a long-awaited IPO in the country on hold until at least its 2017 to 2018 fiscal year – which covers the period to the end March 2018.
At a half yearly trading meeting, CEO Vittorio Colao admitted they had experienced issues throughout the year , but said the company responded accordingly by strengthening our data and voice commercial offers.
In addition to this, he also revealed that the company was focusing its spectrum acquisition investments to the most successful and profitable areas of the country.
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.”