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MOSL: TELECOM-Vodafone India reports muted 4QFY18 revenue-Continues to focus on improving network synergies

TELECOM: Vodafone India reports muted 4QFY18 revenue; Continues to focus on improving network synergies

 

Vodafone India’s 4QFY18 results indicate continued ARPU pressure and declining earnings. The management highlighted that the merger should conclude by June 2018 and that the merged entity continues to focus on improving network synergies and responsiveness to peer pricing. It intends to deleverage the balance sheet and would draw upon Indus stake value if additional funding is required for the merged entity..

 Revenue declines 5% QoQ; EBITDA up due to one-offs

Wireless revenue declined 5% QoQ (23% YoY) to INR71b, mainly due to decline in ARPU. This is in line with the 4% QoQ decline in Bharti India’s wireless revenue and 6% QoQ decline in Idea’s revenue. Yet, EBITDA grew 17% QoQ to INR19.1b (Bharti’s India wireless EBITDA declined 16% QoQ while Idea’s EBITDA grew 18% QoQ), led by one-off provision reversal and cost optimization measures (including network sharing). EBITDA margin expanded 450bp QoQ to 24.6% (Bharti’s India wireless EBITDA margin was 28.4% and Idea’s EBITDA margin was 23.6%). For FY18, revenue declined 20% to INR324b and EBITDA declined 35% to INR75.5b.

 ARPU declines 8% QoQ on low-value bundles

ARPU declined 8% QoQ to INR105 (v/s 6% QoQ decline to INR116 for Bharti and 8% QoQ decline to INR105 for Idea). However, this was partly offset by 5% (10.2m) QoQ growth in subscriber base to 222.7m, reducing the impact on revenue. Data traffic surged 36% QoQ to 774b MB (monthly 258b MB data traffic; 15% of RJio’s 4QFY18 number); yet, falling data ARPU led to 6% QoQ decline in data revenue to INR17.7b. Voice revenue declined 4% QoQ to INR53.3b.