Vodafone hit by £5.2bn losses as Indian division feels heat
MOBILE PHONE giant Vodafone has slumped into the red with annual losses of £5.2bn after taking a mammoth hit on its Indian arm.
The group confirmed a £3.2bn writedown on its under-pressure Indian business after striking a deal in March to merge the operation with Idea Cellular to help tackle a raging price war in the country.
Vodafone also suffered a 15.8 per cent plunge in underlying earnings in the UK as it was hit by falling sales and the impact of the pound’s plunge since the Brexit vote.
Overall underlying earnings lifted 5.8 per cent to £12bn, excluding the Indian division, and the group forecast stronger profit growth of up to 8 per cent over the current financial year.
Vittorio Colao, group chief executive of Vodafone, cheered the group’s “confidence in the outlook” as he announced a 2 per cent rise in the dividend payout to investors despite the hefty bottom line loss.
The Indian writedown comes after it has suffered from the emergence of a new competitor in the once lucrative market, with new network Jio blowing rivals out of the market by offering free calls and data until April 1.
Vodafone’s deal with Idea Cellular will see it own a 45 per cent stake in the new entity, which will give it greater might in the Indian market and deliver cost savings of around £8bn.
But the group is also suffering amid stiff competition in its domestic UK market, where service revenues fell 17 per cent, or 3.3 per cent with the impact of the weaker pound stripped out.
UK earnings plunged 31 per cent to £1bn including the exchange rate hit from the pound, or 15.8 per cent lower excluding currency changes.
But it said there was “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 – those joining less those leaving.
Vodafone added that growth across the wider European business slowed in the second half of the year, with service revenue up 0.1 per cent in the final quarter as it was knocked by regulation on roaming charges.
The mobile phone giant said that it had begun to turn the corner when it comes to customer service in the UK after major billing system errors in 2015 led to a £4.6m fine from Ofcom for “serious breaches” of consumer protection rules.
Good momentum in broadband, with 33,000 customers added. A spokesperson for Vodafone