Europe drags Vodafone profit down

Vodafone’s net profit fell £867 million (€1 billion) in the year to end-March, as Europe’s financial crisis took its toll on the global mobile operator’s earnings.
 
The carrier’s net fell to £7 billion in fiscal 2012, as it took a £4 billion hit on its operations in Southern Europe. The fall has seen the firm cut its guidance for the year to end-March 2013, as it predicts a negative impact from tougher regulation in the European region, including higher-than-expected cuts in mobile termination rates (MTRs).
 
Europe’s weakness in the recent fiscal year was partially offset by success in emerging markets, meaning Vodafone achieved modest 1.2% growth in revenue in the 12 months to end-March. Growth in messaging, data, and fixed line sales offset a £1.5 billion year-on-year decline in voice revenue.
 
Chief executive Vittorio Colao claims the cellco’s performance was steady in the recent fiscal year, noting it made progress in emerging markets and in North America, through its Verizon Wireless joint venture. However, he concedes sales growth in Europe is becoming harder to achieve due to the “tough macroeconomic and regulatory environment.”
 
Colao predicts the firm’s enterprise business and emerging market operations will “continue to be strategic drivers of our performance,” in fiscal 2013, but notes that MTR cuts and weaker consumer demand in Europe will make growth in the region hard to come by. He forecasts adjusted operating profit of between £11.1 billion to £11.9 billion for the year to end-March 2013, and free cash flow in the range of £5.3 billion to £5.8 billion.

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