Vodafone's profits halve, cost cutting speeds up

Vodafone, the world’s biggest mobile operator, has seen its pretax profits drop by half to £4.2 billion, from £9 billion last year. CEO Vittorio Colao also said profits would remain flat this year at best: Vodafone expects operating profits for this year to be £11 billion to £11.8 billion. In the financial year to the end of 31 March 2009, operating profits rose 16.7% to £11.8bn.

The reason for the dramatic fall is a total of £5.9 billion in impairment charges.

The company has cut the value of its Spanish business by £3.4 billion and its Turkish business by £2.25 billion. Spain is suffering acutely in the current economic climate, coupled with which its mobile market is fiercely competitive. Its Turkish property has proved harder to make profitable than was envisaged when Vodafone bought it in 2005.

Vodafone also sliced £250 million from the value of its business in Ghana, although it only bought the stake – in the face of bitter opposition – last July.

Colao says the company will accelerate its programme to trim costs by £1 billion by 2011, which it outlined in November to attain that goal during this year.

The operator has already got rid of 500 jobs in the UK, around 5% of the British workforce and there are fears more will go.