Vodafone rebounds into first-half net profit

British mobile phone giant Vodafone rebounded back into first-half net profit, it said Tuesday, after the previous year's performance was skewed by a vast Indian write-down. Earnings after taxation hit 1.131 billion euros ($1.318 billion) in the six months to the end of September, it revealed in a results statement.
"We are able to report a strong financial performance, with substantial ... profit growth, and we are raising our financial outlook for the year," said chief executive Vittorio Colao. Vodafone had suffered a spectacular net loss of 5.129 billion euros in the same part of last year, when it was plagued by an enormous write-down on the value of its Indian business.
Operating profit jumped almost a third to 2.0 billion euros in the first half of 2017, boosted by falling costs and lower taxation. "In the first half of the year we have maintained good commercial momentum," added Colao. "Revenue grew organically in the majority of our markets driven by mobile data and our continued success as Europe's fastest growing broadband provider."
Total sales however sagged 4.1 percent to 23.1 billion euros, due partly to the deconsolidation of its Dutch unit Vodafone Netherlands. Sales were also impacted by the weak pound, which tumbled following last year's shock EU exit referendum. In India, Vodafone reported progress but admitted that competition remains fierce.
The London-listed group agreed in March to merge its Vodafone India division with Idea Cellular in order to create India's largest telecoms operator and fight ultra-competitive new player Reliance Jio. "In India competition remains intense," noted Colao. "There are however signs of positive developments in the Indian market, with consolidation of smaller operators and recent price increases from the new entrant. "We are making good progress in securing regulatory approvals for our merger with Idea Cellular."
Vodafone had taken an impairment of 5.0 billion euros on its Indian activities in the first half of 2016. India's telecoms industry was rocked by the September 2016 launch of the Reliance Jio network, which promised free voice calls for life and drastically reduced tariffs. Turning to the outlook, Vodafone meanwhile lifted its full-year guidance for growth in underlying profit - as measured by earnings before interest, taxes, depreciation and amortization (EBITDA) - to around ten percent. That compared with the previous range of between four and eight percent.
"The improvement to the outlook primarily reflects stronger than expected underlying European revenue growth and a later than anticipated commercial launch by the new entrant in Italy," Vodafone added on Tuesday.