Vodafone plunges to $6.7-bn annual loss, hurt by India operations

Vodafone, the world's second largest mobile phone operator, reported a €6.1-billion ($6.71 billion) loss for the financial year ended March 2017, pulled down by its Indian operations that have turned loss-making in a highly competitive environment.

Vodafone India saw a 0.5 per cent drop in service revenue to Rs42,956 crore in FY 17, hurt mainly by the competition triggered by Reliance Jio's entry last September.

The telecom firm gained 0.7 percentage points in revenue market share in fiscal fourth quarter compared to the previous one.

Earnings before interest, depreciation, taxes and amortisation (EBIDTA) stood at Rs11,784 crore in the financial year ended 31 March 2017, with an EBIDTA margin  at 27.3 per cent, against 30.2 per cent it recorded in FY16.

Vodafone India said it has also increased its customer base by 5.6 per cent to 209 million subscribers at the end of March 2017.

The average revenue per user (ARPU) for fiscal fourth quarter ended 31 March 2017 stood at Rs158, almost at par with the previous quarter ended 31 December 2016. Net debt for India operations was Rs60,200 crore.

Vodafone India also performed well in its enterprise segment, which contributed about 17 per cent to its service revenue.

Its data ARPU at Rs140 in fourth quarter of FY 17 was a big drop from Rs160 when compared on a like to like basis, but that hit was because of 'free data offer by a new entrant', the company said.

The company has invested Rs8,311 crore in FY17 in new broadband site roll-out to deliver superior customer experience and growth in key focus areas.

Yet, Vodafone forecast growth in group earnings and a jump in free cash flow for the current year, driven by stablilising average revenue from its contract customers and lower spending.

It predicted a rise in organic adjusted core earnings growth of between 4 and 8 per cent and free cash flow of about €5 billion up from €4.1 billion in the previous year.

''We expect to sustain our momentum in the coming financial year, generating free cash flow of around €5.0 billion,'' chief executive Vittorio Colao said.

''Our confidence in the outlook is demonstrated by another 2 per cent increase in our dividend.''

The forecast growth in free cash flow this year will come as the company reduces investment in its network following its Project Spring upgrade.

Vodafone's organic service revenue growth slowed to 1.5 per cent in the final quarter from 2.1 per cent in the third, due to regulatory headwinds in Europe.

Organic service revenue in Europe grew by just 0.1 per cent in the quarter, while Africa, Middle East and Asia Pacific grew 6.8 per cent, it said.

Vodafone is merging its India operations with rival Idea Cellular amidst cut-throat competition in the telecom market.