A sharp drop in its Indian business operations means that Vodafone will be hoping to merge with Idea Cellular as soon as possible

Vodafone Group has revealed a 23.1% drop in its Indian business operations, which it says is caused by hyper competitive market conditions and a sharp decrease in termination charges.

The Indian market has been dramatically impacted by the emergence of Reliance Jio, who have forced down prices for consumers and, consequently, margins for operators. Reliance Jio recently introduced a monthly voice and data tariff for just 149 rupees (£1.64) per month. This has been widely reported as being the lowest priced tariff in the industry, making India one of the most difficult markets for operators to turn a profit.    

Data traffic on Vodafone’s Indian network increased five-fold in 2017, with Indian customers consuming an average of 2.8Gb of data per month. However, dramatic reductions in data charges across the sub-continent has left Vodafone struggling to capitalise on these gains.

Vodafone Group revealed a 3.6% drop in its global revenues last quarter, to 11.8 billion (£10.3 billion), in part fuelled by the contraction of its Indian business.

"While the competitive and regulatory environment in India remains intense, we continue to make good progress in securing the required approvals for the merger with Idea Cellular, and we have taken steps to strengthen the combined company’s financial position," said Vittorio Colao, group chief executive at Vodafone.

Idea Cellular recently announced plans to raise $1.1 billion in equity in an attempt to square off its balance sheet and streamline the upcoming merger with Vodafone.

As margins continue to shrink in India’s fiercely competitive telecoms sector, consolidation may be the only way for operators to survive. Vodafone will be hoping that the required regulatory approval for its merger with Idea Cellular comes sooner rather than later.