Vodafone doubles profit, but problems remain

Vodafone increased its pre-tax profits to £8.7 billion in its last quarter, more than double for the same period last year. The news surprised the market but failed to hide a decline in U.K. revenues and a costly write-down of £2.3 billion--a quarter of its value--of Vodafone's Indian subsidiary due to intense competition. This embarrassment was reduced slightly with the news that the company had increased the valuation of its Turkish subsidiary--a long-term problem child--by £200 million.

Key to the overall increase in profits was a 9.8 per cent year-on-year jump to £6.1 billion of service revenues from Vodafone's Asia-Pacific and Middle East units. However, European service revenues were down 3.5 per cent to £28.3 billion, and in Africa and central Europe service revenue fell 1.2 per cent to £7.4 billion.

Revenues in the U.K. notably slipped by 4.7 per cent and earnings by 16.6 per cent to £1.14 billion.

The company, with some justification, blamed the Indian authorities for making the country a less attractive and more expensive market to do business. Vodafone CEO Vittorio Colao said that the Indian government was attempting to squeeze operators for cash rather than encourage investment to improve the country's economic prosperity.

Analysts reviewed these results and the performance of Colao during his two-year period as CEO as positive. He has made the idea of 'One Vodafone' work, and rather than running a disparate collection of unconnected country assets, the company's scale is paying off. It pays 4 per cent to 5 per cent less for equipment than its rivals and operates some of the industry's most efficient networks as a result.

For more on this story:
- read The FT & Rethink Wireless

Related stories:
Vodafone CEO touts openness, warns of Google's dominance
Pressure mounts on Vodafone to revamp business structure
Rumour mill: Vodafone, Verizon merger more likely, claims analyst
What do you believe about Vodafone's future?

Suggested Articles

Wireless operators can provide 5G services with spectrum bands both above and below 6 GHz—but that doesn't mean that all countries will let them.

Here are the stories we’re tracking today.

The 5G Mobile Network Architecture research project will implement two 5G use cases in real-world test beds.