Days after it unveiled plans to attempt to sort out its problematic Indian business, mobiles phones giant Vodafone PLC (LON:VOD) has said intensifying competition in that country, and in the UK, means its full year earnings will be at the "lower end" of guidance.
In its latest trading update, the FTSE 100-listed group reported a 1.7% increase in overall organic service revenue for its third quarter.
But in the UK, Vodafone said its service revenues fell 3.2%, while in India they were down 1.9%
READ: Vodafone looks to tackle Indian tiger …
Vittorio Colao, Group Chief Executive, commented: "Our overall performance in Europe and Africa remained strong during the third quarter, reflecting good execution.”
But, he added: “In the UK we have made good progress in improving customer service but face heightened price competition in Enterprise.”
And the Vodafone boss said: “We anticipate intense competitive pressure in India in the fourth quarter and are taking a series of commercial actions, including the extension of 4G services to 17 leading circles.”
On Monday, Vodafone revealed that it is in talks to merge its Indian subsidiary with local rival Idea Cellular in an all-share deal to create a market leader better able to take on new entrant Reliance Jio.
The company confirmed its full-year guidance for free cashflow of at least €4bn but said it now expected its underlying earnings (EBITDA) to come in at the lower end of a range for growth of 3% to 6%.
Colao concluded: “We are reconfirming our guidance for the year and are confident that we will sustain our commercial momentum."
In reaction to the weak update, Vodafone shares dropped over 3%, or 6.40p to 187.95p in early trading.
Analysts at Haitong Research said: “We think our and consensus forecasts will likely inch down after today.”
In a note to clients, reiterating a ‘neutral’ stance on Vodafone shares, they added: “We remain cautious about VOD’s prospects, at the current share price level”.
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