Vodafone Records Heavy Losses for Year

Vodafone Group reported a massive loss after one-time charges in the year that ended March 31, but the company’s underlying operations continue to do well and are outperforming its competitors, it said Tuesday.

Vodafone reported group revenue for the year of 29.4 billion pounds (US$51.1 as of March 31, the last day of the period reported), up 10 percent from 26.7 billion pounds a year earlier. Revenue from mobile telecommunications, Vodafone’s primary line of business, reached 28.1 billion pounds, up 9.3 percent from 25.7 billion pounds a year earlier.

Despite the revenue gains, Vodafone reported an operating loss of 14.1 billion pounds for the year, including one-time charges of 23.5 billion pounds. The charges are due to a write-down from several of its operations—mainly from Germany, but also relating to Vodafone’s business in Italy and Sweden. The company reported an operating profit of 7.9 billion pounds a year earlier.

During the year, Vodafone added 21.5 million customers, an increase of 15 percent from the 170.6 million users a year earlier.

With mobile data growing increasingly important to operators across the industry, Vodafone reported that nonmessaging data revenue grew by 61 percent, but still reached only 800 million pounds. Vodafone registered more than 6 million new third-generation (3G) devices during the year, including 660,000 laptop data cards. More than 60 percent of Vodafone’s networks are now 3G.

Prior to the release of the financial results, analysts had speculated that Vodafone might make some major strategic changes, possibly including a head count reduction, sale of its stake in U.S. operator Verizon Wireless or a decision to aggressively acquire landline operations.

At least one of those predictions has come true: The company will lay off 400 people from its corporate headquarters, mainly in its marketing organization, said Arun Sarin, chief executive of Vodafone, speaking during a conference call to discuss the results.

In addition, Vodafone set out five new strategic initiatives that include basic principles such as reducing costs and growing revenues in Europe, delivering growth in emerging markets and delivering on customers’ total communications needs.

-Nancy Gohring, IDG News Service

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