Vodafone India’s service revenue drops 18.9% in FY 2018

Country’s second-largest telecom operator’s Vodafone India’s service revenue fell 18.9% in FY 2018, hurt by the tariff war and drop in interconnection charges, the telco Wednesday said.

Service revenue stood at Rs 34,855 crores in FY18 (down by 18.9%), impacted by reduction in interconnect usage charge, international termination charge and continuing suppressed pricing in the industry, the UK-headquartered company in a statement said.

The Mumbai-based telco reported earnings before interest, tax, depreciation and amortization (EBITDA) at Rs 7,766 crores during FY 2018.

In the quarter ended December, 2017, the telco’s service revenue dropped more than 23% to Rs 8,110 crore on the back of arch rival Reliance Jio’s competitive tariff and a cut in interconnect usage charges (IUC).

Billionaire Mukesh Ambani’s Reliance Jio’s disruptive foray in September 2016 has continued to drag telco’s revenue performance, and the competitive tariffs by incumbent operators to counter arch rival Jio has added to its financial woes.

The company reported operating free cash flow (OFCF) at Rs 1,214 crores in FY 2018, and said that the ‘competitive intensity’ impacted its cash flow.

“Operationally, it was an extremely challenging year wherein industry revenues were adversely impacted due to a reduction in interconnect usage charges, international termination charges and continuing suppressed pricing,” Sunil Sood, Managing Director and CEO, Vodafone India said.

Sood, however, said that the company has completed the sale of our standalone tower business to ATC for Rs 38.5 billion and was making a good progress in securing the necessary regulatory approvals for the merger of Vodafone India and Idea Cellular.

“The merger is expected to complete in June 2018,” the executive reiterated.

Vodafone India has added 14 million new customers in 2018 taking its subscriber base to 223 million, and had a revenue market share (RMS) of 20.9% as of Q3, 2018.