Vodafone records heavy losses for year
- 30 May, 2006 10:00
Vodafone Group PLC reported a massive loss after one-time charges in the year to March 31 -- but the company's underlying operations continue to do well and are outperforming its competitors, it said Tuesday.
Vodafone reported group revenue for the year of £29.4 billion (US$51.1 billion as of March 31, last day of the period reported), up 10 percent from £26.7 a year earlier. Revenue from mobile telecommunications, Vodafone's primary line of business, reached £28.1 billion, up 9.3 percent from £25.7 billion a year earlier.
Despite the revenue gains, Vodafone reported an operating loss of £14.1 billion for the year, including one-time charges of £23.5 billion. The charges are due to a write-down from several of its operations -- mainly from Germany, but also relating to Vodafone's business in Italy and Sweden. The company reported an operating profit of £7.9 billion a year earlier.
During the year, Vodafone added 21.5 million customers, an increase of 15 percent from the 170.6 million users a year earlier.
With mobile data growing increasingly important to operators across the industry, Vodafone reported that nonmessaging data revenue grew by 61 percent, but still only reached £800 million. Vodafone registered more than 6 million new 3G (third generation) devices during the year, including 660,000 laptop data cards. Over 60 percent of Vodafone's networks are now third generation (3G).
Prior to the release of the financial results, analysts had speculated that Vodafone might make some major strategic changes, possibly including a head count reduction, sale of its stake in U.S. operator Verizon Wireless or a decision to aggressively acquire landline operations.
At least one of those predictions has come true: The company will lay off 400 people from its corporate headquarters, mainly in its marketing organization, said Arun Sarin, chief executive of Vodafone, speaking during a conference call to discuss the results.
In addition, Vodafone set out five new strategic initiatives that include basic principles such as reducing costs and growing revenues in Europe, delivering growth in emerging markets and delivering on customer's total communications needs.