REUTERS - Vodafone Group PLC’s India unit reported a 39 percent fall in operating profit for the first half of this fiscal year, hurt by a bruising price war started by an upstart rival and a new nationwide sales tax.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to 40.75 billion rupees ($622.26 million) in the half year ended Sept. 30, from 67.04 billion rupees a year earlier, Vodafone India, the country’s No.2 telecom operator, said in a statement on Tuesday.
EBITDA margin shrunk to 21.4 percent from 29.6 percent, while service revenue dropped about 16 percent to 190.02 billion rupees.
Reliance Jio Infocomm, a telecom venture controlled by billionaire Mukesh Ambani, entered the market late last year with free voice and cut-price data, forcing incumbent carriers to drop prices even though their margins took a hit.
The competition drove small carriers out of business and also sparked off consolidation in the sector.
Vodafone India and Idea Cellular Ltd, India’s third-biggest wireless carrier, are to merge operations, potentially creating the country’s biggest telecom player.
On Monday, Vodafone India agreed to sell its standalone tower business to American Tower Corp for 38.5 billion rupees.
($1 = 65.4875 Indian rupees)
Reporting by Krishna V Kurup in Bengaluru; Editing by Subhranshu Sahu