Vodafone Group swings to $6.7b loss on India
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Vodafone Group has swung to a €6.1 billion ($6.76 billion) full-year loss as a result of a €3.7 billion writedown on its Indian operations.
Vodafone India recorded an impairment of loss of €4.51 billion for the financial year as a result of the anticipated impact of the entry of Reliance Jio Infocomm into the market and the resulting intense price competition.
The Indian unit reported an operating loss for the financial year of €4.17 billion, compared to a 423 million operating profit a year earlier. Service revenue also fell 4.9%, or 0.7% on an organic basis, to €5.85 billion.
But after Vodafone India reached its agreement to merge with Idea Cellular to create India’s largest mobile operator, the impairment charge was reduced to €3.7 billion. Idea Cellular recently also posted a net loss for the financial year.
Vodafone India’s total net debt meanwhile grew to €8.7 billion by the end of the financial year, up from €8.1 billion at end-2016. Some €7 billion of this was spectrum-related debt
The impending merger has now led Vodafone to classify Vodafone India as part of its discontinued operations for reporting services.
The Vodafone Group’s total revenue meanwhile fell 4.4% to €47.63 billion, but operating profit grew 182.2% to €3.72 billion.
Questions & Answers
Q.What was the main reason for Vodafone Group's significant loss?
What was the main reason for Vodafone Group's significant loss?
The primary cause was a €3.7 billion writedown on its Indian operations. This impairment loss was due to intense price competition following Reliance Jio Infocomm's entry into the market, significantly impacting Vodafone India.
Q.How did the merger with Idea Cellular affect Vodafone India's financial situation?
How did the merger with Idea Cellular affect Vodafone India's financial situation?
The agreement to merge with Idea Cellular led to a reduction in the impairment charge, lowering it to €3.7 billion. However, Vodafone India was subsequently classified as part of Vodafone Group's discontinued operations for reporting purposes.
Q.Despite the group's overall loss, did any of Vodafone Group's key financial metrics improve?
Despite the group's overall loss, did any of Vodafone Group's key financial metrics improve?
Yes, Vodafone Group's operating profit actually grew by 182.2% to €3.72 billion. This occurred even as the total group revenue fell by 4.4% to €47.63 billion.
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