Vodafone Says Pressures in India and UK to Weigh on Earnings

Vodafone, the world’s second biggest mobile phone group, said it would meet the “lower end” of its earnings guidance for the full year as its battles intensifying competition in India and Britain.

Vodafone Says Pressures in India and UK to Weigh on EarningsThe difficult performance in India, where new entrant Jio has shaken up the market, overshadowed continued growth in Europe, with the exception of its home British market. It reported a 1.7 percent rise in overall organic service revenue for its third quarter.

“We anticipate intense competitive pressure in India in the fourth quarter and are taking a series of commercial actions, including the extension of 4G services to 17 leading circles,” the company said on Thursday.

Vodafone said on Monday it was in talks to merge its Indian subsidiary with local rival Idea Cellular in an all-share deal to create a market leader better able to take on new entrant Reliance Jio Infocomm.

Britain also remained tough for Vodafone, with service revenue declining 3.2 percent, which it said reflected increased competition in enterprise, an area of strength for the operator.

The company reiterated its target to generate at least EUR 4 billion of free cash flow in the year to end-March, but it said it now expected its core earnings to come in at the lower end of a range of 3 to 6 percent growth.

Analysts were expecting third-quarter organic service revenue excluding the Netherlands to grow 1.6 percent, based on 13 forecasts.

The company’s reported service revenue was EUR 12.3 billion in the three months to end-December, broadly in line with market forecasts according to a company-provided consensus.

Aakash Ghosh

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