Global telecom giant, and the 2nd largest mobile service provider in the world Vodafone has reported losses nearing $6.71 Billion in financial year 16/17.
The underwhelming numbers from the Indian market are being held responsible for these losses. Vodafone India said service revenue declined by 4.9 per cent against - 1.9 per cent in Q3 and -11.5 per cent in Q4.
The congestion of the market due to the emergence of Reliance Jio could be a major factor in this decline.
This has prompted 2 members from the CCI (Competition Commission of India) to file a dissent note blaming Jio for violating the regulatory norms by creating a huge subscriber base before the commercial launch. The note also includes Jio giving wrong estimates of its subscriber base and average call duration, which were responsible for congestion of its network.
Seeking to reassure investors about the future, however, the group forecast growth in earnings and a jump in free cash flow for the current year, driven by stabilising average revenue from its contract customers and lower spending.
"We expect to sustain our momentum in the coming financial year, generating free cash flow of around 5.0 billion euros," Chief Executive of Vodafone, Vittorio Colao said on Tuesday. "Our confidence in the outlook is demonstrated by another 2 per cent increase in our dividend."
Vodafone India is also planning a merger with Idea Cellular India.
On 20 March 2017 Vodafone Group Plc and Idea Cellular entered into an agreement to combine their operations in India (excluding Vodafone's 42 per cent stake in Indus Towers) to create India's largest telecom operator. The combined company would become the leading communication provider in India with over 400 million customers, 35 per cent Customer Market Share and 41 per cent Revenue Market Share (based on Q3FY17 TRAI release).
This merger is set to cater to the collective goal of both the companies to compete with Reliance Jio in the Indian market.
