Vodafone India posts Rs 348.5 billion service revenue for the FY18

The second largest telecommunication company in India, Vodafone, announced Rs 348.5 billion service revenue for the FY18 down 18.9 per cent from the year ago. The firm said that revenue was impacted by reduction in interconnect usage charges (IUC), reduction in international termination charge (ITC) and continuing suppressed pricing in the industry.

“Our business managed costs extremely well, which helped mitigate the reduction in our earnings before interest, tax, depreciation and amortization (Ebitda)  margin despite rolling out 50k 3G/4G sites during the year. Our strategic focus on democratizing data, enriching the content portfolio and bundled offerings resulted in us gaining a disproportionate share of customers from the ongoing consolidation in the industry to become the telecom service provider of choice to 223 million customers,” said Sunil Sood, MD and CEO of Vodafone India after the results were announced.

The Trai-led regulation changes including reduction of domestic IUC from 14 paisa to 6 paisa per minute (effective 1st October 2017) and ITC settlement charges from 53 paisa to 30 paisa per minute (effective 1st February 2018), has stressed incumbent players.

Ebitda fell 34 per cent to Rs 77.6 billion while the Ebitda margin was fell 520 basis points to 22.1 per cent. The company said, “Strong cost management performance mitigated decline in Ebitda margin.” Operating free cash flow is down almost 60 per cent to Rs 12.14 billion in FY18 due to “competitive intensity” the company said. The firm posted  an operating profit of Rs 98 billion.

Vodafone has completed the sale of their standalone tower business for Rs 38.5 billion during the year. The company said  they were making steady progress in securing the necessary regulatory approvals for the merger of Vodafone India and Idea Cellular which is expected to complete in June 2018. Net debt for Vodafone India (standalone) stood at Rs 621 billion in FY18.

The company said that data usage grew 350 per cent over the year with average data usage being around 5 GB. With additional 22 million broadband users added during the year the company closed the year with 59.8 million 3G/4G subscribers and a total mobile user base of 222.7 million. While user base has grown around 6.5 per cent during the year, the company increased 3G/4G base by 58.5 per cent during the year.

Average revenue per user fell to Rs 119 compared to Rs 142 in Q4 in the year ago period with Reliance Jio still leading the ARPU table. 

"Vodafone reported revenue degrowth of 4.4 per cent quarter on quarter, which is higher than Airtel but lower than Idea. Given the healthy healthy subscriber addition during the year, the company seems to be on the right track despite pricing pressure," said a telecom sector analyst who did not wish to be quoted. Analysts have also noted that profits were helped by the financial benefit of a provision release in the fourth quarter following "positive legal judgements" that the company mentioned.