Vodafone Loss Widened by Hefty India Write-Down -- Update
November 15 2016 - 4:31AM
Dow Jones News
By Stu Woo
LONDON-- Vodafone Group PLC said Tuesday that it remained on
track to meet its full-year goals despite reporting a sharply wider
net loss and taking a EUR5 billion ($5.38 billion) write-down on
its Indian business because of cutthroat competition in the
populous country.
Vodafone reported a net loss of EUR5 billion in the six months
ended Sept. 30, compared with a loss of EUR2.3 billion in the same
period a year earlier. But the market cheered its organic growth in
Europe and sent shares of the U.K.-based telecommunications giant
up by about 2% in early trading.
The world's second-biggest mobile carrier behind China Mobile
Ltd. by subscribers, Vodafone centers its business in Europe but
has holdings in a hodgepodge of emerging markets, most notably in
India, Egypt, Turkey and South Africa.
In established markets such as Germany, it has focused on
building land lines and partnering with TV providers to offer
"quad-play packages"--selling cellphone, land line-phone, internet
and cable services for one price.
The market is trickier in India. The country's richest man,
Mukesh Ambani, in September released a plan to undercut mobile
competition in the already crowded market by offering monthly plans
for as low as 149 rupees, or $2.20. Mr. Ambani's mobile phone unit,
Reliance Jio Infocomm Ltd., also offered free services until next
year.
"The scale of what Jio is doing in India is unprecedented,"
Vodafone Chief Executive Vittorio Colao said Tuesday. "It is very
hard to compete with someone who gives stuff for free." Mr. Colao
said Vodafone was counting on Indian regulators to enforce a rule
that bars offering promotions for free services for more than 90
days. Vodafone's chief financial officer, Nick Read, said the
company was still prepared for an initial public offering of its
Indian unit but was waiting for market conditions to improve.
Vodafone said revenue over the six-months to the end of
September fell 3.9% from the same period a year earlier to EUR27.1
billion, and that earnings before interest, taxes, depreciation and
amortization were down 1.7% at EUR7.9 billion. It said both
declines were primarily because of foreign-exchange movements.
Vodafone said its organic service revenue in the six-month
period grew 2.3% to EUR24.8 billion compared with a year earlier,
driven by growth in Germany and Italy.
In its outlook, Vodafone cited better-than-expected performance
in Europe but increased competition in India. It narrowed the range
for its full-year Ebitda outlook to between EUR15.7 billion and
EUR16.2 billion from EUR15.7 billion and EUR16.1 billion.
Write to Stu Woo at Stu.Woo@wsj.com
(END) Dow Jones Newswires
November 15, 2016 04:16 ET (09:16 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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