Reports a 2.6% growth in its pre-tax profit for April-September; defers India IPO due to unfavourable market conditions
Vodafone Plc took a €5 billion hit on account of its India operations and has deferred the initial public offering (IPO) for its Indian arm due to unfavourable market conditions.
The telecom firm on Tuesday reported a 2.6% growth in its pre-tax profit for the April-September period at Rs 6,704 crore.
Underlining that headwinds exist on the regulatory and competitive fronts, the company said its revenue growth came slower than the country’s GDP growth, at 5.9% to Rs 22,579 crore during the six-month period.
“We can see that the GDP is consistently above 7% in the last few years and the telecom industry has however slowed down a little bit, thanks to regulatory pressures as well as competitive pressures. We have witnessed several positive changes in the recent past and these include spectrum availability where the whole lot of spectrum that was available in the country was there for the auction this time,” said Sunil Sood, MD & CEO, Vodafone India Ltd.
Sood said the headwinds faced by the industry will result in an “accelerated consolidation” where the weaker players will be taken over by stronger ones.
“In the short term, there has been a lot of volatility and this is accelerating consolidation, especially of the weaker players. In the long run, we see the data potential and growth will continuously increase and you can see that some of this from the latent demand from the free offer the amount of data that is getting consumed really shows what is the extent of the latent demand actually in the marketplace. Therefore, in the long term, we will see an explosion of data potential and growth. We also feel that we are strongly positioned especially after the spectrum acquisition in the recently-concluded auction,” he said.
Speaking on the GST, Sood said, “Service industry has no removal of excise duty, and therefore, as an industry, we are pitching for the lower band of GST, which is the 12% band.”
About the impairment of €5 billion taken by Vodafone Plc, he said it is an accounting issue which will have no impact on operations. “The impairment charge of €5 billion is a shareholder issue and not really of the Indian operations. IPO will take place when conditions improve and it may not happen in this financial year. We have never mentioned the timeline for the IPO; we have mentioned that we are preparing for an IPO and we continue to execute in those directions. If the conditions are ready and if our shareholders and Board give us the go-ahead to execute the IPO, we will do so,” said Sood.
There was also a drop in its pre-tax margins to 29.6% against 30.5% in the year-ago period.
JIO PRESSURE
The overall average revenue per user was at Rs 186 in the quarter but the voice revenues were impacted by ongoing pressures. In the face of competition posed by Reliance Jio, Sood said pricing will not be a differentiating factor in the long run
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 "Sunil Sood")
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