Vodafone Plc took a €6.3 billion (1€=Rs 72.90) gross impairment charge on its investments in India, the company disclosed in a statement. The British telecom major has invested €16.32 billion in its Indian operations since it acquired the company from Hutchison Whampoa Ltd. nine years ago. Vodafone said net of tax adjustments, the net impairment stood at €5 billion. The telecom major said the impairment was mainly related to goodwill and its assets in India.
The impairment charge relates to goodwill, other intangible assets and property, plant and equipment. The impairment charge was driven by lower projected cash flows within the business plans resulting from our reassessment of expected future business performance following the recent change in competitive dynamics.
Vodafone Plc said the recent commercial launch of Reliance Jio has ‘created a high degree of uncertainty over a range of commercial planning assumptions including future pricing, profitability and market structure’.
Vodafone India
The Indian arm announced its earnings for the first half of the financial year 2016-17. Revenues for the company rose 5.9 percent to Rs 22,579 crore. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to Rs 6,534 crore. The EBITDA margin for the company declined marginally to 29.6 percent as against 30.1 percent in the same period last year. The company did not disclose its net profit for the first half.
Vodafone India saw its revenue market share rise by 0.6 percent to 22.5 percent in the second quarter. The company saw pressure on its data average revenue per user or ARPUs, with the average revenue per user declining marginally to Rs 164 compared Rs 166 in the first quarter. This was primarily led by the company providing higher data allowances of up to 50-60 percent as a result of competition.
At the end of September 30, 2016, the company had a net debt of Rs 35,430 crore.
IPO Delayed
Vodafone India’s much awaited initial public offering (IPO) won’t be coming in the current financial year. The company continues to prepare for the possible listing and plans to operationalise the spectrum acquired in the recently concluded auction across the eight circle within this financial year, said Sunil Sood, the managing director and chief executive officer of Vodafone India.
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