Mobile telecoms group Vodafone reported a first-half net loss of 5 billion euros ($5.5 billion) on Tuesday after writing down the value of its Indian business by the same amount due to the start of a price war sparked by a powerful new rival.
Chief Executive Vittorio Colao said an improvement in its European markets was "modestly ahead" of expectations, led by Germany and Italy, but competition in India had intensified and was expected to hit its cash flow.
The three biggest players in the Indian market, leader Bharti Airtel, Vodafone and Idea Cellular, have seen the market thrown into turmoil by the arrival of Reliance Jio Infocomm, which is backed by India's richest businessman Mukesh Ambani.
Jio has made an immediate impact with the launch of free calls and cut-price data services in September.
Colao said Jio's free trials were "unprecedented" and Vodafone was watching carefully to see that the promotions were limited to 90 days, as required by the regulator.
"Any company needs to start billing, that will be the moment when we will start seeing exactly how the market is going," he told reporters on Tuesday.
"For the time being, we have reduced our prices, we have increased our allowances, we made special offers for the value seekers in the market, but of course it's harder to assess the impact until players play by the same rules."
Vodafone has been looking to spin off its Indian business but said on Tuesday it would now wait for market conditions to stabilize before listing Vodafone India's shares. This would not happen before the end of March next year, it said.
"It's our intention to IPO as soon as market conditions improve in India," Chief Financial Officer Nick Read said.
Meanwhile Vodafone slightly lowered the top of its forecast range for the group's full-year earnings to 16.1 billion euros from 16.2 billion. The lower limit was left unchanged at 15.7 billion euros.
Citi analyst Simon Weedon said the cut at the top end was "somewhat pernickety", but he expected the market to be relieved that competition in India wasn't more damaging at this stage.
Vodafone's shares, which have fallen 15 percent in the last three months, were up 0.2 percent at 205 pence by 1115 GMT.
Customers in Europe were responding well to bigger data packages and network improvements, Colao said, and its 4G mobile broadband subscriber base had increased by 15 million to 39.3 million. Some 525,000 new customers had also taken its broadband service.
Like for like revenue growth accelerated in Germany and Italy in the second quarter, while a decline in its home British market improved as it continued to recover from problems caused by a new billing system.
"We expect to sustain our underlying performance in the second half of the year and remain on track to meet our full-year objectives despite macroeconomic uncertainties," Colao said.
Vodafone reported earnings before interest, tax, depreciation and amortization of 7.9 billion euros for the six months to Sept. 30, up 4.3 percent and beating a 7.8 billion euro consensus forecast.
Organic service revenue was up 2.4 percent in the second-quarter, it said, ahead of the 2.2 percent recorded in the first and beating forecasts of a slight decline.
($1 = 0.9262 euros)