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Technology / Networks

Vodafone shares rise despite huge €6.1 billion loss

The Vodafone Group has announced a year-to-end-March loss of €6.1 billion following a huge write down of its business in India.

The worlds second largest mobile provider, which operates in 26 different countries, reported that it had also had an underwhelming year in the UK.

However despite these losses, the company’s share price actually increased more than 3% thanks in part to the company’s confident forecast for the year ahead. Vodafone has forecast a growth in earnings and a jump in cash flow for 2017 due to a stabilising revenue and decreased spending.

Chief Executive Vittorio Colao said :”We expect to sustain our momentum in the coming financial year, generating free cash flow of around 5.0 billion euros.”

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“Our confidence in the outlook is demonstrated by another 2 percent increase in our dividend.”

The company saw an increase of just 0.1 in organic service revenue for the quarter in Europe. Though Africa, Asia Pacific and Middle East saw a growth of 6.8%

In future the Vodafone Group foresees that there will be a core earnings growth of 4-8%.

Matthew Kendall, Telecoms Analyst at The Economist Intelligence Unit said: “Vodafone’s results are a measure of just how cut-throat the Indian mobile market is at the moment. The low-price offers from new market entrant Reliance Jio have completely shaken the market, and operators are struggling to compete. The big question now is how long Jio can sustain these offers, given the strain it is putting on its margins, and those of its competitors.”

“In its home market, Vodafone too has problems, having been hit with a £4.6m fine for misselling and poor handling of complaints in October of last year. Indeed, Vodafone has a particularly poor reputation for customer service in the UK, and with the inflationary impact of Brexit potentially leading to a rise in mobile prices, the operator will have much on its plate tackling problems both home and abroad over the short term.”

Due to the intense competition in the Indian telecommunications market the group has merged its Indian division with Idea Cellular
This article is from the CBROnline archive: some formatting and images may not be present.