Vodafone loss doubles to $5.5 billion
�Competition in India has increased in the year, reducing revenue growth and profitability�
Vodafone, British Telecom giant which is one of the India's leading telecom operator, on Tuesday informed that its losses had double to $5.5 billion around 5.1 billion euros, largely due to fierce competition in the Indian market and an impairment charge of 6.4 billion euros on the group’s investment in India.
It claimed that the loss after tax soared to 5.1 billion euros in the six months to September 30 compared with a net loss of 2.5 billion euros the past year. “Competition in India has increased in the year, reducing revenue growth and profitability,” Vittorio Colao ,Vodafone chief executive said in the results statement on Tuesday.
“We have responded to this changing competitive environment by strengthening our data and voice commercial offers and by focusing our participation in the recent spectrum auction on acquiring frequencies in the more successful and profitable areas of the country,” he said.
In its statement, Vodafone also said that it had been hit by an impairment charge of 6.4 billion euros “in respect of the group’s investment in India”. It is to be noted that Reliance Jio's entry in India challenged India’s three big telecom players – Bharti Airtel, Vodafone and Idea Cellular.
However, Vodafone's performance other than India were the highlight in the statement as it reported earnings before interest, tax, depreciation and amortisation of 7.9 billion euros, beating a 7.8 billion euros consensus forecast in Europe.
In the London-headquarters there was a rise of 4.3 per cent in core earnings in the first half of the year, helped by improving trading in big European markets like Germany and Italy. Vodafone's share price was up 1.6 percent at 207.9 pence in early deals on London's rising FTSE 100 index.
Stripping out the exceptional hit from India as well as interest payments, Vodafone posted pre-tax profit of EUR 7.9 billion for the first half, a drop of 1.7 percent compared with one year earlier.
“We expect to sustain our underlying performance in the second half of the year and remain on track to meet our full-year objectives despite macroeconomic uncertainties,” Colao said.