Vodafone has taken a £2.3 billion ($3.4b) charge on its Indian operation, its key growth prospect outside its core markets of Europe and the US.
Announcing its Q1 result Tuesday, it blamed the writedown on increased competition and the 3G auction.
Vodafone paid Hutchison $10.9 billion for a controlling stake in Hutchison Essar three years ago.
However, the issue of “six new national licenses in the market one year after our entry and the resulting intense price competition have led to an impairment charge of £2.3 billion,” Vodafone said.
It said it had increased market by half a point to 25% and had kept ebitda margin flat at 25.9% in the quarter.
CEO Vittorio Colao called on the Indian government to allow consolidation between mobile operators, FT.com reported. “There is a need for political leadership in shaping the industry,” he said.
Market leaders Bharti Airtel and Reliance Communications have also announced falls in income for the first quarter.
Cola said Vodafone’s “primary focus remains on driving results from our existing emerging markets.”
The company beat its guidance with group earnings of £8.61 billion ($12.7b), up 180%, a result of the economic recovery, growth in data and an accelerated cost reduction program.
It forecast an operating profit in the range of £11.2 to £12 billion for 2011.