Vodafone logged on Tuesday a large annual net loss after slashing the value of its troubled Indian division, but underlying earnings soared on a solid European performance. The British mobile phone giant posted a loss of 6.3 billion euros ($6.9 billion) for the 12 months to March, after a net loss of 5.4 billion euros in the previous financial year, it said in a statement. The loss was driven by taxation changes and a 3.7-billion impairment at its Indian division - which Vodafone is splinning off into a joint venture.
However, underlying or operating profit excluding exceptional items almost tripled to 3.7 billion euros on cost-cutting - and a solid showing in Europe. Vodafone shares rallied four percent after it also ramped up the shareholder dividend by two percent, taking the total payout to 14.77 eurocents. "Our focus on excellence in customer experience has enabled further improvements in our overall commercial and financial performance during the year," said chief executive Vittorio Colao.
Sales declined 4.4 percent to 47.6 billion euros on adverse foreign exchange movements. Vodafone is the world's second-largest mobile-phone carrier in terms of subscriber numbers, trailing global leader China Mobile. In the first half, Vodafone initially took a non-cash impairment of 5.0 billion euros on its Indian activities and blamed a sharp increase in competition.
However in March, Vodafone announced the merger of its Indian unit with Idea Cellular in order to create India's largest telecoms operator and fight ultra-competitive new player Reliance Jio. Following the deal, Vodafone added Tuesday it had partially reversed the Indian impairment - but it still stood at 3.7 billion euros. Colao has sought to reshape the business following his appointment in 2008. The group offloaded its 45-percent stake in Verizon Wireless in 2015 for a colossal $130 billion, one of the biggest transactions in global corporate history. In 2016, Vodafone sold its Dutch fixed-line business Vodafone Thuis to Germany's T-Mobile for an undisclosed amount. The sale followed the merger of Vodafone Netherlands with Liberty Global's Dutch division Ziggo into a joint venture.
And earlier this year, Vodafone announced the creation of its Indian joint venture. Russ Mould, investment director at AJ Bell, told AFP that the Vodafone boss had brought "clarity" to the group's overall strategy. "Colao has brought greater strategic clarity to Vodafone, focussing its mobile activities in markets where it either was or had the potential to be top-ranked player, using joint-ventures to augment the company's competitive position in India and the Netherlands, and investing for the long-term so the firm could maximise the potential of 4G and eventually 5G services," he said.
"The decision to withdraw from the USA looks better and better, given the brutal price war which has broken out stateside ... and Colao will now be hoping to reap the benefits of the investments made in service and infrastructure. "A messy set of full-year figures today offers some grounds for optimism on an underlying basis."
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