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U.K.-based telco takes 5 billion non-cash charge as competition from Reliance Jio bites.
Vodafone on Tuesday reported a wider first-half net loss compared to last year, after writing down the value of its Indian operation.
The U.K.-based telco has become embroiled in a new price war in India, sparked by the launch of Reliance Jio Infocomm, which is offering free calls and cheap data until the end of the year.
Vodafone is feeling the pinch, and on Tuesday it revealed that intensifying competition led it to write down the value of Vodafone India by €5 billion.
"We have responded to this changing competitive environment by strengthening our data and voice commercial offers and by focusing our participation in the recent spectrum auction on acquiring frequencies in the more successful and profitable areas of the country," said Vodafone CEO Vittorio Colao, in a statement.
Indeed, Vodafone India increased its total spectrum holding by 62%, spending €2.7 billion, of which 92% was spent on spectrum in the 12 telecom circles in which it is the market leader. Vodafone also recently revealed plans to extend its 4G footprint to 17 circles from nine by the end of its current financial year, which finishes next March.
Vodafone India’s customer base grew by 2.8 million during the six months to 30 September, topping 200 million in total for the first time ever.
The long wait for Vodafone India’s IPO looks set to continue though: the company said it plans to proceed with a flotation "as soon as market conditions allow. We do not expect this to take place during the current financial year."
Meanwhile, Colao said Vodafone’s European operations improved "modestly ahead" of expectations, driven by Germany and Italy.
First-half service revenue in Europe came in at €16.32 billion, down from €16.81 billion a year ago, but up 0.6% organically.
In the U.K., service revenue fell 2.7%, reflecting the impact of Vodafone’s troubled migration to a new billing system.
Vodafone’s Africa, Middle East and Asia Pacific (AMAP) business generated service revenue of €7.99 billion, down from €8.18 billion a year ago, but up 7.4% organically.
At group level, service revenue fell to €24.81 billion from €25.6 billion, but up 2.3% organically, while EBITDA grew 4.3% organically year-on-year to €7.91 billion.
Net loss widened to €5 billion from €2.34 billion in the first half of 2015, driven by the aforementioned India writedown.
Vodafone trimmed the top end of its full-year EBITDA range to €16.1 billion from €16.2 billion.
"Overall, we expect to sustain our underlying performance in the second half of the year and remain on track to meet our full-year objectives despite macroeconomic uncertainties," Colao said.
