The global operator chose to bite the bullet in southern Europe, where the still unfolding economic disaster there has hamstrung their business just like everyone else. They have therefore decided to take a £5.9 billion (€7.3 billion) charge by writing off of the company’s network business in both Spain and Italy.
In both countries they are the #2 behind the incumbents Telefonica and Telecom Italia Mobile, neither of which is itself having a fun time at the moment either. The writeoff gave them a £1.9 billion loss during the prior six months.
But there was a big cash windfall to balance the scales. Verizon Wireless will be issuing a $8.5 billion dividend to its two owners, of whom Vodafone is the 45% minority partner.
Verizon has generally resisted paying out this dividend over the years, which many see as a way of pressuring Vodafone to sell out. But this is the second such dividend in the past year, so perhaps they’ve given up on that plan now.
Or, maybe it’s just the fact that Obama won and they’d like to do it before taxes go up as part of whatever bargain gets struck over that fiscal cliff thing. Whatever.
Earlier this year, Vodafone bought Cable & Wireless and they have now begun what has been billed as a huge $800 million integration plan, putting the UK fiber to work in a big way to power their wireless business there. While they’re retreating in southern Europe, perhaps they will find something else interesting to do with the cash from Verizon Wireless further north.