The world's second-largest mobile operator reports its losses have doubled thanks to a price war in India. But its home market Europe is a bright spot.
British mobile phone giant Vodafone on Tuesday said its first-half loss had doubled to 5.1 billion euros ($5.5 billion) due to a massive writedown on its Indian division.
But the company's stock gained 1.5 percent after a 4.3-percent rise in core earnings beat expectations, thanks to an improved situation in Europe, it said as it released its interim results.
"We have further improved our performance during the first half of the financial year with Europe modestly ahead of our expectations - led by Germany and Italy," CEO Vittorio Colao said.
The world's second-biggest mobile telephone provider by subscribers after China Mobile said its loss after tax in the six months to September 30 was twice its 2015 loss of 2.5 billion euros. This followed an impairment charge of 6.4 billion euros on its operations in India, which it blamed on increased competition.
Too much reliance on India
Established players in India have been stung by moves made by the country's richest man, Mukesh Ambani, whose heavily indebted Reliance Telecommunications has been offering free mobile services in a bid to gain market share. Vodafone said it would refocus its Indian operations to acquire frequencies in the more successful and profitable areas of the country.
Vodafone's better than expected results from Europe came despite EU regulations that further reduced roaming charges. Organic EBITDA growth of 3.1 percent represented around two-thirds of worldwide income.
The company said its diversification into data and "quadruple-play" services was paying off, with its annual targets for German cable operator Kabel Deutschland, which it acquired three years ago, achieved within six months.
"Our substantial network investments and 'more-for-more' propositions have allowed us to capture opportunities from strong data demand, supporting European mobile contract ARPU and continued growth in emerging markets," Colao said.
Following a series of acquisitions including the hostile takeover of Germany's Mannesmann in 2000 that built Vodafone into Europe's biggest operator, the company moved into emerging markets in the 2000s under Indian-born CEO Arun Sarin.
Vodafone India initially faced an ownership squabble with the Essar Group and is locked in a long-running tax dispute with authorities. Vodafone gained full ownership of its Indian operations in 2014, one year after India eased restrictions on foreign ownership of communications assets.
In 2009, it recorded a writedown of its Turkish division amid investor allegations it had overpaid when it acquired the former Telsim in 2006.
Under Colao, Vodafone has built up its non-mobile operations in its existing markets and shed minority stakes, including its 45 percent share of US-based Verizon Wireless. He chose not to purchase France's SFR and Poland's Plus, assets Vodafone had long coveted, when they went on the market.
sgb/hg (AFP, Reuters)