Vodafone, Idea to sell tower units for $1.2 bn

Vodafone, Idea to sell tower units for $1.2 bn

Total subscribers at the end of September 30, 2017 was 20.7 crore only.

In a statement, the company blamed "continued price competition from new operator and incumbents, seasonality and GST" responsible for its revenues taking a hit.

The Mumbai-based company's service revenue declined 15.8% to Rs19,002 crore; Ebitda (earnings before interest, taxes, depreciation and amortization) declined 39.2% to Rs4,074 crore; and Ebitda margin narrowed 8.2 percentage points to 21.4%, even as the company cut down on capital expenditure by 13% to Rs2,915 crore.

"In India competition remains intense".

Idea Cellular and Vodafone India have separately agreed to sell their respective standalone tower businesses in India to ATC Telecom Infrastructure Private Limited (ATC TIPL), owned by American Tower Corporation, for an aggregate enterprise value of Rs. 7,850 crore ($1.2 billion). We see signs of positive developments with consolidation of smaller operators.

The receipt of the proceeds from the sale of towers, prior to completion of the merger, was anticipated and provided for in the merger agreement, and hence, would not affect the agreed terms of the the Vodafone India and Idea merger, including the amount of debt which Vodafone will contribute to the combined company at completion.

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The company said it has garnered almost 20.7 crore subscribers at the end of September which it said was 3.3% increase YoY.

The telco's average revenue per user stood at Rs 132 in the second quarter compared to Rs 141 in the first quarter of the financial year.

Data traffic on its mobile network also grew as the company unleashed a host of data benefits under bundled data schemes.

Vodafone reported a service revenue of Rs. 19,002 crores in H1 FY18, down from Rs. 22,579 crores it reported in H1 FY17.

Furthermore, it said the data usage is exploding and usage per subscriber ( 1MB for Q2FY18) is 2.7GB per month. Growth was driven by higher smartphone penetration, now at over 38 percent of the total customer base. Upon announcing their merger in March this year, both operators also stated that they would be looking to sell their standalone tower units so as to strengthen the combined entity, which will surpass Bharti Airtel to become the Indian market leader.