1. Reliance Jio impact: Vodafone profit falls 10.2%; revenue at Rs 43,095 cr

Reliance Jio impact: Vodafone profit falls 10.2%; revenue at Rs 43,095 cr

Situation similar to Airtel and Idea; the key concern is the ability to bleed as RJio’s tariffs are still competitive

By: | New Delhi | Published: May 17, 2017 7:31 AM
For perspective, during the January-March period, data volume for Vodafone grew 37% year-on-year and 23% quarter-on-quarter. (Reuters)

Vodafone India on Tuesday joined its incumbent peers, Bharti Airtel and Idea Cellular, to get hit on all key financial metrics during FY17, impacted by the free services launched by Reliance Jio in September last year. The company, which is in the process of being merged with Idea Cellular to be able to face competitive pressures better, reported a 10.2% decline in its operating profit at `11,784 crore and a marginal 0.6% fall in revenues at Rs 43,095 crore during the year. It also witnessed a margin contraction of around 3 percentage points to 27.3% during the fiscal.

Similar to Bharti and Idea, Vodafone also said in its post-earnings call that it expects stability to return to the business in the current fiscal, since Jio has started charging for its services from April. Despite the three incumbents getting severely bruised by the free minutes of Jio, the silver lining as noted by analysts is that their data volumes, which had been on the rise but got dented in the October-December quarter due to Jio’s free services, saw volumes once again increasing during the January-March period.

This shows that there’s appetite for data in the consumers and with price stability returning to the market, average realisation per user as well as realisation per MB would also stabilise, albeit slowly. The other positive is that the three incumbent operators have not lost subscribers, either overall or for data. For instance, at the end of Q4, Bharti’s data subscribers (3G+4G) grew 20.5% YoY, Vodafone’s by 35.6% and Idea’s 4.6%. Even churn was reduced by Bharti and Idea, while Vodafone saw it increasing marginally by 0.4%.

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For perspective, during the January-March period, data volume for Vodafone grew 37% year-on-year and 23% quarter-on-quarter. Similarly, for Bharti, the growth was 53% on a YoY basis and 31% on a QoQ basis. For Idea, the numbers were 54% YoY and 17% QoQ. With pricing under pressure, obviously data Arpu fell sharply. For Bharti the decline was 7.42% QoQ and 17.3% YoY; for Vodafone 11.40% QoQ and 12.5% YoY; and Idea 0.90% QoQ and 25.17% YoY.

Vodafone’s overall data subscriber base increased to 66.9 million from 65 million in Q3FY17, of which 37.7 million are 3G/4G subscribers, which have grown 8% QoQ. Its data volume increased 23% QoQ — higher than Idea, but slower in comparison to Bharti Airtel. Overall, it added 4.4 million subscribers taking the total subscriber base to 209 million.

In voice, total minutes increased 11% QoQ. However, pricing pressure continued in line with industry trends — voice and data yields declined 22% and 38% YoY respectively.

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