HOME > BUSINESS > Vodafone writes off due to Rs 36,500 cr due to Reliance Jio launch

Vodafone writes off due to Rs 36,500 cr due to Reliance Jio launch

india-revenue

vodafoneVodafone Group has taken an impairment charge of 5.0 billion euros — equivalent to Rs 36,540 cr, due to the increased competition in the Indian market after the launch of Reliance Jio.

“A new entrant has recently launched free trial services for an extended time period and commercial price plans that were at a significant discount to prevailing market pricing, resulting in competitive responses from other operators.

“This has created a high degree of uncertainty over a range of commercial planning assumptions including future pricing, profitability and market structure.

“Accordingly there are a wide range of potential outcomes which the group has had to assess to derive its current view of future business performance and cash flows for impairment valuation purposes,” it said.

An impairment charge is essentially an amount that the company recognizes as a ‘loss’ on its profit and loss statement when the value of any of its investments declines.

For example, if the value of a big building falls due to a fire or accident, the company will write off that value as an impairment charge.

In case of Vodafone India, the global parent believes the cash flows will reduce going forward, affecting the value of the Indian unit. This difference has been written off.

Impairment charge, in this case, is a non-cash item, and not money that the company has lost in material terms immediately. If the value of the asset is revised upwards, it can write the cost back.

“The impairment charge relates to goodwill, other intangible assets and property, plant and equipment. The impairment charge was driven by lower projected cash flows within the business plans resulting from our reassessment of expected future business performance following the recent change in competitive dynamics,” Vodafone said.

“To the extent that future commercial outcomes are different to those assumed within our plan, this valuation may need to be revised,” it added.

Vodafone is one of the most expensive operator in India for data, and likely to be the worst affected by Jio’s launch. Jio, still under trial, is carrying 10-20 times the data traffic of all other Indian operators combined.

INDIA SERVICE DETAILS

Service revenue from India grew by 5.9% on year, excluding the impact of currency fluctuations.

Data revenue increased 16% year on year while voice revenue increased 2.7%.

Excluding regulatory drags including mobile interconnect charge cuts, roaming price caps and an increase in service tax, the quarterly rate of growth slowed to 6.3% in Q2, it added.

“This underlying slowdown was mainly driven by lower data revenue growth resulting from increased competitive pressure.”

Data revenue growth slowed from 22% in Q1 to 16% in Q2. This was driven by a flattening of unique data user growth quarter-on-quarter, reflecting the impact of ‘free’ promotional offers from a new entrant.

Vodafone’s data customer base at the end of September was 69.6 million, down from 69.7 million three months earlier.

Overall data pricing declined 14% year-on-year, while data usage per customer continued to grow strongly to 504 MB on average, up 28%.

“Our 3G and 4G customer base continued to grow to 36 million, up 51%, and smartphone penetration is now 35%,” it added.

Voice revenue growth increased to 2.7% in Q2 from 2.2% in the preceding quarter. Total mobile customers increased 2.8 million over the period, giving a closing customer base of over 200 million for the first time.

During the period, the company added 4,100 new 3G sites, taking the total to 63,000. Total 4G sites was at 13,000. In comparison, Idea Cellular had around 25,000 4G sites at the end of September.

“We now have a strong position for our future 4G needs and plan to extend our 4G footprint from 9 to 17 circles by the end of the current financial year. These circles cover around 91% of our service revenues and 94% of our data revenues,” it said.

Vodafone said it intends to proceed with an IPO of Vodafone India as soon as market conditions allow. “We do not expect this to take place during the current financial year,” it added.

Follow ULTRA.news
Bharti Airtel dismayed, Vodafone disappointed by TRAI IUC cut As expected, incumbent telecom operators have expressed their disappointment with the regulator going ahead with cutting the interconnect charges paid by one operator to another at the time of handing off internetwork calls.The operators are likely to approach the government ...
Ambani suddenly looks like the smart guy after TRAI termination charge cut Operators such as Bharti Airtel, Vodafone, BSNL and Idea Cellular are likely to cut call tariffs for 2G and 3G users after TRAI decision to cut 'termination charges' to 6 paise per minute from 14 paise.More importantly, the bet that Mukesh Ambani placed by making voice free s...
Idea Cellular raises 4G plan prices by 25%, 84-day pack now at Rs 505 Even as Reliance Jio continues its slow move towards 'full pricing' of its services, rival Idea Cellular has taken a step towards increasing promotional 4G pack prices across its tariff cards.While the operator was offering 1GB data per day for 84 days at around Rs 400 in ke...
50% of Idea Cellular cell-sites now have 3G or 4G Idea Cellular said it has now achieved 3G or 4G penetration for 50% of its cell-sites."Idea added nearly 50,000 broadband sites over the last 12 months period ending August ’17, growing its broadband footprint to cover 5,888 Census towns and nearly 105,755 villages, reaching...
RCom to shut down 2G GSM network in Gujarat Reliance Communications said it has asked subscribers in Gujarat to move to its 4G network as its 2G spectrum in the state is expiring at the end of this month."The Company has initiated migration of its customers in Gujarat circle to an all 4G network, prior to expiry of 2G ...
Vodafone offers unlimited voice, data in 18 countries at Rs 5000/month Vodafone today introduced an unlimited roaming pack for Indian users in 18 countries priced at Rs 500 per day or Rs 5,000 per month.Both incoming and outgoing calls as well as data usage will be free.“We launched our flagship unlimited international roaming proposition...
BSNL to form tower co, but will it sell stake? The Union Cabinet today gave its approval for hiving off mobile tower assets of Bharat Sanchar Nigam Limited into a separate company owned by BSNL.While the move, is not of that big a significance in itself, it is crucial from the perspective of what could come next.It is...
Bharti Airtel starts VoLTE roll-out, service live in Mumbai Bharti Airtel launched its Voice over LTE (VoLTE) services today, starting in Mumbai, and said call charges will remain the same.Airtel VoLTE, which works over 4G, will offer customers HD quality voice calls along with faster call set up time."Airtel VoLTE will be availab...
Bharti Airtel unveils 5GB-per-day 4G pack Bharti Airtel has become the first operator in India to break the 2GB-per-day cap under its daily data plans, offering up to 5GB per day under its various plans. Under the new plans, customers can recharge for various denominations that allow them to get 1 GB, 2 GB, 2.5 GB, ...
Reliance Jio corners 91% of data card market; could hit BSNL broadband The shipments data cards or dongles in India jumped 15% in Apr-June period compared to the previous three months, thanks to aggressive sales of Reliance Jio Mifi devices.The Ambani company had a 91% share of the dongle market in the country during the period, said CyberMedia...
BSNL to “shortly” launch 4G with VoLTE, Reliance Jio to face competition Players like Bharti Airtel, Idea Cellular and Vodafone are heaving a sigh of relief that Reliance Jio has not unveiled any 'monsoon surprise' offer. However, state-owned BSNL may be about to increase the competition in the market with the launch of its 4G services shortly.An...
End of freebies? Vodafone prices 1GB/day for 28 days at Rs 392 With Reliance Jio not showing any signs of unveiling yet another 'surprise' offer, telecom tariffs in India seems set to rise, particularly for data.Vodafone today announced an new tariff pack that offers 1 GB of 3G or 4G data and free calls for Rs 392. However, unlike simil...
Reliance Jio hits 10% revenue market share – Credit Suisse New telecom operator Reliance Jio is estimated to have notched up a market share of around 10.5% in terms of total telecom revenue in India, broker Credit Suisse said.However, after deducting interconnect payments made to rivals, Jio's share is likely at around 9%, it said. ...
JioPhone booking starts at 5:30 PM today at Reliance Jio stores The Mukesh Ambani-led telecom operator is likely to start prebooking for its JioPhone device at 5:30 PM today, according to sources.Booking can done in four ways -- using the company's website Jio.com, using the MyJio app and by going to a either a Jio Store or any multi-bran...
BSNL STVs now valid on roaming as well BSNL, the state-owned telecommunications company, said it has decided to extent the benefits of all special recharges to its subscribers even when they're roaming.So far, these special tariffs were available only in the home location.For example, STV 349 which offers unli...
Reliance Jio starts turning off free services, urges users to recharge Reliance Jio, the telecom firm that has caught the country by storm, has started turning off the connections of those subscribers who have not recharged their mobile phones since the beginning of April.In April, it had introduced the Summer Surprise offer, and gave around fou...
TRAI to hear the public on net neutrality in open house this month The Telecom Regulatory Authority of India has started registrations for an open house discussion on its upcoming recommendations on net neutrality.The open house discussion will be held on Wednesday, August 30 at 9:30 AM in New Delhi. The venue has not been finalized yet, and...
Vodafone Play adds 12 channels from Discovery including DSPORT Vodafone India said it tied up with Discovery Communications to offer 12 of its channels on its 'Play' app.These channels include Discovery Channel, TLC, Animal Planet, Discovery HD World, Discovery Science, Discovery Turbo, Discovery Kids, Investigation Discovery (ID), Anima...
Idea Cellular likely to expand 4G offers this year Idea Cellular, India's third biggest telecom player by revenue, is likely to see its 4G data capacity rise to three times the current level over the next nine months, which is likely to push the price of data down further.This could impact Reliance Jio's ability to stop its d...
Vodafone slashes 4G offer prices after Airtel, Idea reveal explosion of data Vodafone India renewed efforts to promote its cut-price voice and data offerings in recent days as the latest quarterly numbers from rivals Idea Cellular and Bharti Airtel suggested they had given out bigger discounts in the April-June period than anyone had expected.Earlier ...
Bharti Airtel will launch VoLTE next year Bharti Airtel is still testing its 4G voice or Voice over LTE service and a pan-India launch will take place only by January-March of 2018.Gopal Vittal"VoLTE is a very complex technology," CEO Gopal Vittal said. "There is a lot of optimization. It has to be tested device...
No plans to launch JioPhone rival – Bharti Airtel Bharti Airtel, India's largest telecom provider by revenue, said it has no intention of launching a rival phone similar to the super-cheap semi-smartphone launched by rival Reliance Jio.Asked if the company needed to come out with a similar, affordable handset to compete with...
Telecom license fees fall 23% as Reliance Jio hits call, data prices The license fees paid by telecom operators in India to the central government fell by 23% to 2,663 crore in the three months ended March compared to the previous three months, the government said.Compared to nine months earlier, the fall was 33%.Telecom access providers, ...
HALVED: Bharti Airtel’s data price crashes to Rs 60/GB due to Reliance Jio Bharti Airtel was forced to slash its data price by half to about Rs 60 per GB in the April to June period of 2017, the latest numbers revealed.In contrast, Bharti Airtel was charging around Rs 125 per GB in the three months from January to March of this year. A year ago, it ...
Bharti Airtel profit down 75%, says market remains “turbulent” Bharti Airtel Limited reported a drop of 14% in its revenue for the first quarter, at Rs 21,958 crore. Adjusted for sale of its units, the drop was 11%, it said.Net profit fell 75% to 367 crore rupees for the first quarter. Operating profit was down 18%.India revenues for...