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.

  • Indonesia informs drug convicts of execution
    Indonesia informs drug convicts of execution

    Indonesia said Saturday it had officially notified eight foreign drug convicts that they will be executed, prompting an appeal from United Nations chief Ban Ki-moon to spare the prisoners and suspend the death penalty. A Frenchman also on death row for drug-related crimes was granted a temporary reprieve after Paris stepped up pressure on Jakarta. The eight -- from Australia, Brazil, Nigeria and the Philippines -- have been transported to the high-security prison island of Nusakambangan where …

  • UN chief urges Indonesia to spare drug convicts from execution
    UN chief urges Indonesia to spare drug convicts from execution

    United Nations chief Ban Ki-moon appealed to Indonesia on Saturday to spare from impending execution a group of 10 death-row drug convicts, most of them foreigners. "The Secretary General appeals to the government of Indonesia to refrain from carrying out the execution, as announced, of 10 prisoners on death row for alleged drug-related crimes," a spokesman for Ban said. Earlier Saturday, Indonesia said it had officially notified eight foreign nationals convicted of drug crimes -- from …

  • AFP monitoring deployment of Chinese seaplanes in Spratlys
    AFP monitoring deployment of Chinese seaplanes in Spratlys

    The Armed Forces of the Philippines (AFP) is adopting a wait and see approach amid reports that China will soon deploy seaplanes to further strengthen its maritime claims in the disputed Spratlys. Brig. Gen. Joselito Kakilala, spokesman for the military and commander of the AFP Civil Relations Service, said they have yet to ascertain the real purpose behind China’s continuing aggressive moves in the region. “We will wait and see before coming up with an official stand,” Kakilala said when …

  • US eyes access to Phl bases in 8 locations
    US eyes access to Phl bases in 8 locations

    The United States has asked for access to Philippine military bases in eight locations to rotate troops, aircraft and ships as Washington shifts its forces to Asia and as China expands its military presence in the South China Sea. US Defense Secretary Ash Carter, in a speech in Arizona, has outlined Washington’s next phase in its Asia “pivot,” deploying its most sophisticated destroyers, bombers and fighters to the region. The Asia “pivot” has already seen US Marines rotating through the …

  • Washington bucks China’s aggressive actions
    Washington bucks China’s aggressive actions

    Short of condemning China’s aggressive actions in the West Philippine Sea, a senior US military official said Washington does not support any act of coercion and bullying. “We don’t stand for coercion, bullying and aggressiveness,” said Brig. Gen. Christopher Mahoney, assistant US military director for  Phl-US Joint Balikatan Exercises 2015. At the sidelines of this year’s joint military exercises’ static aircraft display held at Clark Air Base in Pampanga, Mahoney told a media briefing that …

  • ‘Giving Bangsamoro police control is constitutional’
    ‘Giving Bangsamoro police control is constitutional’

    The proposed grant to the chief minister of the envisioned Bangsamoro region of operational control over police forces in the area is consistent with the Constitution, a senior administration lawmaker said yesterday. Rep. Elpidio Barzaga Jr. of Dasmariñas City in Cavite made the statement to allay the fears of his colleagues that the proposal, contained in the draft Bangsamoro Basic Law (BBL), would violate the Charter. It is clear in the proposed BBL that the Bangsamoro police will be part …

  • Noy off to KL for Asean meet
    Noy off to KL for Asean meet

    President Aquino will arrive here this afternoon with Manila hopeful of support from the Association of Southeast Asian Nations (ASEAN) to achieve peace and stability in the West Philippine Sea (South China Sea) as well as economic prosperity and inclusive growth among the people in the region. Philippine Ambassador to Malaysia Jose Eduardo Malaya III said that with respect to the dramatic developments in the South China Sea, Malaysian Foreign Minister Anifah Aman had called for the early …

  • Madrid Fusion Manila reignites Pinoy appetite for great food
    Madrid Fusion Manila reignites Pinoy appetite for great food

    After months of preparation and hard work from both the government and private sectors, the future of food is finally here in the country’s capital. Madrid Fusión Manila opened its doors on Friday to an international delegation who eagerly awaited the discussions of some of the most renowned and revered names in the culinary world. Madrid Fusión Manila is a historic gastronomic event marked by talks and exhibitions that showcases Spain and the Philippines’ shared cultural heritage, as well as …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options