Vodafone sees hefty loss after hit on Indian arm

Mobile phone giant Vodafone has slumped into the red with annual losses of £5.2 billion after taking a mammoth hit on its Indian arm.

The group confirmed a £3.2bn write-down on its under-pressure Indian business after striking a deal in March to merge the operation with Idea Cellular to help tackle a price war in the country.

Vodafone also suffered a 15.8% plunge in underlying earnings in the UK as it was hit by falling sales and the impact of the pound’s fall since the Brexit vote.

Overall underlying earnings lifted 5.8% to £12bn, excluding the Indian division, and the group forecast stronger profit growth of up to 8% over the current financial year.

Chief executive Vittorio Colao cheered the group’s “confidence in the outlook” as he announced a 2% rise in the dividend payout to investors despite the hefty bottom-line loss.

The Indian write-down comes after it suffered from the emergence of a new competitor in the once lucrative market.

Vodafone’s deal with Idea Cellular will see it own a 45% stake in the new entity, which will give it greater might in the market and deliver cost savings of £8bn.

However, the group is also suffering amid stiff competition in its domestic UK market, where service revenues fell 17%, or 3.3% with the impact of the weaker pound stripped out.

UK earnings plunged 31% to £1bn including the exchange rate hit from the pound, or 15.8% lower excluding currency changes.

There was, however, “good momentum” in UK broadband, with 33,000 customers added in the final three months of its year to March 31 on a net basis.

Vodafone added that growth across the wider European business slowed in the second half of the year.