British telecoms giant Vodafone said on Thursday that annual earnings would be at the low end of forecasts due to difficulties in India, but was bullish over its performance in Europe and Africa.
Vodafone said in a statement that underlying profit—as measured by earnings before interest, taxes, depreciation and amortization (EBITDA)—would be toward the bottom of its prior guidance of between 15.7-16.1 billion euros (around $17 billion).
“We anticipate intense competitive pressure in India in the fourth quarter and are taking a series of commercial actions,” including expansion of fourth-generation network technology, said chief executive Vittorio Colao.
He added: “Our overall performance in Europe and Africa remained strong during the third quarter, reflecting good execution.
“In Europe, service revenue growth continued, led by Italy, Germany and Spain.”
Vodafone faces challenging trade in India and in November it booked a vast 6.4-billion-euro impairment charge on its investment for the first half of the current financial year.
On Monday, meanwhile, Vodafone revealed it was in talks to merge its Indian unit with Idea Cellular in a move that would create India’s largest telecoms company.
The confirmation ended months of speculation that the two operators were exploring a deal to help fend off Reliance Jio whose recent arrival shook up India’s ultra-competitive mobile network market.
Reliance Jio began operations with great fanfare last year and is owned by India’s richest man Mukesh Ambani.
The 4G Jio network launched in September with an audacious free service for the rest of 2016, followed by vastly cheaper data plans and free voice calls for life.
It forced rivals to dramatically slash their tariffs and left them scrambling to match the deep pockets of Jio, which is backed by India’s hugely wealthy energy-to-chemicals conglomerate Reliance Industries.
Bobby Bawa