Vodafone takes €7.5bn writedown
Vodafone reported service revenue that missed analysts' estimates and took a £5.9 billion (€7.5 billion) impairment writedown in Spain and Italy.
Service sales fell 1.4 per cent in the second quarter ended September 30 excluding the impact of acquisitions and currency fluctuations, the Newbury, England-based company said today in a statement. That's the first decline in 10 quarters.
As Europe's sovereign-debt crisis led consumers and businesses to reduce spending, Vodafone chief executive officer Vittorio Colao is increasingly relying on the carrier's US venture with Verizon Communications for cash and growth.
Verizon Wireless, 45 per cent owned by Vodafone, said yesterday it will distribute an $8.5 billion dividend to the parent companies by the end of this year.
Vodafone said today it will start a £1.5 billion share-repurchase programme after receiving the Verizon dividend.
The company said its performance during the first half of this fiscal year has been "slightly below our expectations" and will be little changed for the rest of the year as the global economy weakens.
Mixed Forecasts Still, operating profit will be in the upper half of the estimated range of £11.1 billion to £11.9 billion.
Free cash flow will be in the lower half of the previously indicated range of £5.3 billion to £5.8 billion.
Mr Colao (51) has been building up Vodafone's business outside Europe with deals like last month's acquisition of New Zealand's TelstraClear, and consolidating assets in Europe, such as a network-sharing deal with Telefonica in the UK, to save money.
Vodafone, whose revenue trails China Mobile, fell 0.6 per cent to 166.6 pence in London trading yesterday.
Meanwhile, Vodafone Ireland has reported a 6.7 per cent increase in the number of smart phone users in the quarter to 877,600, up from 823,000.
Vodafone Ireland's contract base stood at 760,600, representing slight growth of 1.1 per cent on the previous quarter and demonstrating that the market remains highly competitive.
Vodafone's fixed line voice and broadband subscribers remained near unchanged at 242,000 at the end of the quarter, the company said in an interim management statement this morning. The Irish subsidiary’s fixed-line voice and broadband customer base was 9.3 per cent higher year-on-year, reaching 241,000 at the end of June.