Vodafone slumps to £2 bn loss on Spain, Italy woes

Mobile phone giant Vodafone on Tuesday revealed it had slumped into a net loss of almost £2 bn during its first half on massive writedowns linked to indebted eurozone countries Spain and Italy.

Vodafone's loss after tax for the six months to September 30, equivalent to $3.138 billion or 2.473 billion euros, came as the company said it suffered charges of £5.9 billion linked to financial turmoil in Spain and Italy.

The net loss of £1.977 bn compared with profit after tax of £6.679 billion in the first half of Vodafone's 2011-12 financial year, the company said in its earnings statement.

Total revenue meanwhile dropped 7.4 percent to £21.78 billion in the first half.

Chief executive Vittorio Colao said the latest results "reflect tougher market conditions, mainly in southern Europe" which would continue to impact the company in the short term.

However he voiced optimism about the longer term owing to Vodafone's growth in emerging markets such as India and Turkey.

Vodafone took a hit of £3.2 billion linked to its operations in Spain and an impairment charge of £2.7 billion for Italy during its first half.

The company added that it would carry out a share buyback totalling £1.5 billion on receipt by the end of 2012 of a £2.4-billion dividend from US company Verizon Wireless, in which Vodafone has a 45-percent stake.

"We have continued to make progress on our strategic priorities over the last six months, with good growth in data and emerging markets in particular," Colao said.

"We remain very positive about the longer-term opportunities."

In the wake of the earnings and share buyback announcements, Vodafone's share price slid 3.0 percent to 161.6 pence in early deals on London's benchmark FTSE 100 index, which was down 0.45 percent at 5,741.36 points.

"The European outlook is far from comforting and the shares have paid the price in early trade for these factors," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

"Even so, positives remain for this behemoth of the telecoms industry. The payout from Verizon is yet another vindication of Vodafone's decision to retain its stake, enabling it to embark on a further share buyback programme.

"Meanwhile, the growth of data usage continues apace, and the emerging markets businesses are looking healthy," the analyst added.

But the weak eurozone economy remains a major concern for Vodafone and other large European companies after Spain's biggest airline Iberia last week announced plans to axe 4,500 jobs to save the loss-making carrier from collapse.

Spain's economy is in deep recession as an austerity programme chokes consumer spending amid unemployment that has surged to more than 25 percent of the workforce.

And the eurozone's fourth-largest economy is hovering on the edge of a sovereign bailout, after already securing a eurozone rescue loan of up to 100 billion euros ($127 billion) for its banks.

In Italy, unemployment has also shot higher since the heavily debt-laden country entered into recession at the end of last year.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • US renews travel warning to Mindanao
    US renews travel warning to Mindanao

    The US State Department renewed its warning about the risks of travel to the Philippines, in particular to the Sulu archipelago, certain regions and cities of Mindanao and the southern Sulu Sea area. In an update on Wednesday of a travel warning it issued Nov. 20, 2014, the State Department said US citizens should continue to defer non-essential travel to the Sulu archipelago due to the high threat of kidnapping of international travelers and violence linked to insurgency and terrorism there. …

  • Phl gains support for APEC Action Agenda
    Phl gains support for APEC Action Agenda

    The Philippine initiative to put the interests of micro, small and medium enterprises (MSMEs) front and center in global and regional trade has made significant progress following the conclusion on Thursday of the 2nd APEC Senior Officials’ Meeting (SOM2) and Related Meetings in Boracay, Aklan. Called “The Boracay Action Agenda to Globalize MSMEs,” the Philippine proposal calls for a host of specific, concrete and practical interventions that APEC economies can implement to provide MSMEs wider …

  • Phl to join Bangkok meet on Rohingya crisis next week
    Phl to join Bangkok meet on Rohingya crisis next week

    The Philippines will join a 15-nation meeting in Bangkok, Thailand next week to address the migration crisis involving thousands of Rohingyas who escaped persecution in Myanmar and Bangladesh. Justice Secretary Leila de Lima bared this yesterday after meeting with United Nations High Commission for Refugees (UNHCR) representative to the Philippines Bernard Kerblat. In an interview, De Lima said the Philippine government has been invited to the meeting. …

  • Magnitude 4.2 quake jolts Sorsogon
    Magnitude 4.2 quake jolts Sorsogon

    LEGAZPI CITY—A magnitude 4.2 earthquake hit Prieto Diaz town in Sorsogon before dawn yesterday, the Philippine Institute of Volcanology and Seismology (Phivolcs) said. …

  • Drought-resistant rice breeds bared
    Drought-resistant rice breeds bared

    SCIENCE CITY OF MUÑOZ, Nueva Ecija – Amid the searing heat, the Philippine Rice Research Institute central experiment station here has identified nine rice breeds which have been proven to be drought-resistant and produce high yields in temperatures as high as 38°C based on a recent study. Thelma Padolina, lead researcher of the study titled “Screening of rice-induced mutants for heat and drought tolerance,” identified the breeding lines as the Ballatinaw lines, PSB Rc72H and Azucena lines. …

  • Phl, US assert rights, ignore China warning
    Phl, US assert rights, ignore China warning

    The United States military will continue air and sea patrols in international waters even after the Chinese navy repeatedly warned a US surveillance plane to leave the airspace over artificial islands China is creating in the disputed South China Sea. The Philippine government also declared it would continue activities in the region, calling on China to respect freedom of navigation and aviation. “Our position on the importance of letting freedom of navigation, freedom of aviation and …

  • MM shutdown eyed for quake drill; 6 schools warned
    MM shutdown eyed for quake drill; 6 schools warned

    Electricity and mobile phone services would be cut throughout Metro Manila, and all private and government offices and businesses, including shopping malls, would be closed. The Philippine Institute of Volcanology and Seismology (Phivolcs) has warned that an earthquake of that magnitude could occur and kill at least 33,500 people and injure at least 113,600 others following a movement in the West Valley Fault. The West Valley Fault has moved four times in the past 1,400 years at an interval …

  • Subaru XV now priced among sedans
    Subaru XV now priced among sedans

    Motor Image Philipinas (MIP), the authorized distributor of Subaru in the country, has positioned its brand new crossover SUV, the Subaru XV, well within the sedan segment’s price range. This move, according to MIP, was made to give the public an opportunity to experience the brand’s unique automotive technologies by lowering its price. Buyers of […] The post Subaru XV now priced among sedans appeared first on Carmudi Philippines. …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options