Vodafone revenues hit by India pressure

James Pearce
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Quarterly earnings fell amidst pressure on Vodafone's UK and Indian units

Vodafone has seen its earnings hit by pressures on its Indian and UK businesses, the operator announced in its latest financial release.

Underlying revenues in the UK fell by 3% for Q3 compared with the previous year, while India saw a dip of 2%. Overall, Vodafone group saw revenues fall by 3.9% to £10.8 billion.

The Indian market has been locked in a price-war since the launch of Reliance Jio in September. Jio has undercut its rivals, including Vodafone, forcing them to lower prices but impacting overall revenues.

This and other pressures in the region has prompted the UK-based operator to enter talks with Idea Cellular, the third largest mobile provider behind Bharti Airtel and Vodafone, about a possible merger. This followed a €5 billion write-down of Vodafone’s Indian unit last year.

However, Vodafone’s revenues were boosted by strong performances in other markets, including South Africa and Turkey, according to CEO Vittorio Colao.

He added: “Our strong organic performance in South Africa and Turkey was partially offset by India, where the sector is affected by free services from the new entrant.

“We anticipate intense competitive pressure in India in the fourth quarter and are taking a series of commercial actions, including the extension of 4G services to 17 leading circles.

“We are devoted to finding a solution and are in an excellent position to recover the market when the newcomer starts billing.”

Colao denied that BT’s acquisition of rival mobile operator was having a direct impact on its UK division.

He said recent developments with BT’s wholesale arm Openreach was a positive for the telecoms industry but said the separation needs to go further.

“It is a positive that there is a cleaner, more separate governance for Openreach. It wasn’t where we wanted it to go – a complete, clean separation – we hope that that is a possibility if things don’t work, but a more independent Openreach which is truly focussed on the service is better for everybody.”