After releasing its third quarter result, India's second largest telecommunication service provider, Vodafone, said that the free services offered by Reliance Jio and the impact of demonetization on prepaid top-ups are impacting business.
Both these factors led to a nearly 2 per cent drop in its service revenue from the country.
"Our strong organic performance in South Africa and Turkey was partially offset by India, where the sector is affected by free services from the new entrant," Vodafone Group chief executive Vittorio Colao 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. As announced earlier this week, we have also entered discussions with the Aditya Birla Group about an all-share merger of Vodafone India and Idea," he added.
The service of the company declined by 1.9 per cent, which says it was driven by heightened competitive pressure following free services offered by the new entrant and the adverse impact of demonetization on prepaid top-up volumes during the quarter.
"We increased our overall customer base and continued to retain our high value customers, but saw increasing pressure on both prices and customer usage," Vodafone said.
The company had also reported a decrease in revenues in its home market (United Kingdom) also as a result of price competition.
"In the UK, we have made good progress in improving customer service but face heightened price competition in enterprise," Colao said.
"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," he said.
"Mobile contract ARPU continued to stabilize, reflecting the successful adoption of our 'more-for-more' propositions, while we remain Europe's fastest growing broadband company, illustrating our effective convergence strategy. We are reconfirming our guidance for the year and are confident that we will sustain our commercial momentum," he added.