Vodafone has warned investors that full-year earnings are likely to be at the lower end of its guidance range because of difficulties in India and the UK.

The UK-headquartered telco blamed free offers from new entrant Reliance Jio for pressure in India, saying this would continue over the January-to-March quarter (Vodafone's fourth).

It also complained about pricing pressure in the UK enterprise segment, where it faces tough competition from rivals including fixed-line incumbent BT Group plc (NYSE: BT; London: BTA), which last year acquired mobile giant EE from previous owners Deutsche Telekom AG (NYSE: DT) and Orange (NYSE: FTE).

The remarks in a third-quarter trading update sent Vodafone's share price down 3.3% on the London stock exchange this morning, although it had recovered and was trading slightly up on its Wednesday closing level at the time of publication.

The implication of the latest update is that Vodafone Group plc (NYSE: VOD) will report "organic" EBITDA growth of about 3% for the 2016/17 fiscal year, having previously guided for an increase of between 3% and 6%.

With operations across a range of markets in Europe, Africa and Asia, Vodafone reported EBITDA of about £11.6 billion ($14.7 billion, at today's exchange rate) in the last financial year on revenues of £41 billion ($51.9 billion).

Vodafone does not provide details of profitability in trading updates but said its Group revenues were down 3.7% in the recent October-to-December quarter, at €13.7 billion ($14.8 billion), compared with the year-earlier period.

"In the UK we have made good progress in improving customer service but face heightened price competition in enterprise," said Vittorio Colao, Vodafone's CEO, in a statement. "We anticipate intensive 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."

The update comes after Vodafone was revealed earlier this week to be in discussions about an all-share merger of its Indian business with number-three player Idea Cellular Ltd. (See Vodafone in Merger Talks With India's Idea Cellular.)

Such a tie-up between the country's second- and third-biggest operators would immediately overtake Bharti Airtel Ltd. (Mumbai: BHARTIARTL) as market leader and rank as one of the world's largest service providers.

India's ultra-competitive mobile market has already witnessed a recent spate of mergers fueled by cut-throat pricing, which has left smaller companies struggling to generate profits. Conditions have grown even tougher since new entrant Reliance Jio began offering consumers free voice services for life and free data for a limited period.

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A breakdown of Vodafone's results shows that its Indian business generated €1.45 billion ($1.6 billion) in service revenues in the recent quarter, registering a 1.9% "organic" decline compared with the year-earlier period.

Revenues in the UK, meanwhile, plummeted 19%, to €1.7 billion ($1.8 billion) -- although Vodafone put the "organic" decline in service revenues at just 3.2% -- despite growth in the base of contract customers.

Currency weakness seems largely to blame for the slide in reported UK revenues following Vodafone's decision to report Group figures in euros rather than pounds sterling, which have lost value since UK citizens voted last June to quit the European Union.

The "Brexit" referendum has prompted questions about Vodafone's commitment to the UK. In the run-up to last year's referendum, Colao said Vodafone would consider moving Group headquarters from London to mainland Europe if the UK were excluded from Europe's single market. And while a UK recession has not yet materialized, economists have expressed concern about the outlook for UK businesses if costs rise and spending is squeezed. (See What Hard Brexit Means for Vodafone, BT.)

Vodafone has also been unhappy about the recent consolidation in the UK market, which has clearly diminished its own role, as well as the regulator's resistance to a "structural separation" of BT, which would force the incumbent to sell its networks business. (See Only BT's Dismemberment Will Sate Rivals.)

Despite the difficulties in India and the UK, Vodafone flagged growth in organic service revenues across all of its other European markets and saw improvements in its African markets and Turkey.

"Mobile contract ARPU [average revenue per user] 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," said Colao.

— Iain Morris, , News Editor, Light Reading