Vodafone heads for takeover trail

Vodafone hinted yesterday that it was on the hunt for fresh acquisitions in Europe as the turnaround in the company's fortunes continued with half-year results at the top end of City expectations.

Underlying earnings for the six months rose to £6.24bn but a further £8bn write-down in the value of Vodafone's German and Italian businesses left it with a £4.55bn net loss for period.

Arun Sarin, chief executive of Vodafone, said that "the time may be ripe" for consolidation, adding that he would look at Hutchison Whampoa's 3 UK network if it came on the market.

His comments follow the demise of easyMobile, which Mr Sarin said was a signal that a trend towards consolidation would soon emerge. "We are reaching a stage in the mobile business where people will close their shops and go home," he said.

Commenting on Hutchison's 3G network in the UK, Mr Sarin said: "If 3 were to put their assets up for sale I think we would look at them," adding that any interest was hypothetical at this stage.

Any acquisition among the larger UK mobile companies would come under scrutiny by the regulators. Yet with five network operators and numerous virtual operators - companies that lease capacity from the networks - the UK is one of the most competitive markets in the world.

The comments suggest a change in tack for Vodafone, which has focused on acquiring companies in high-growth emerging markets in eastern Europe and Africa while cutting costs in mature markets.

Mr Sarin said the company was keen to increase its stake in Bharti Televentures, India's largest operator, in which it has a 10 per cent interest. He said the company is also keen to increase its presence in China, where it has a 3 per cent stake in China Mobile.

Vodafone is writing down £8.1bn in goodwill amortisation related to its German and Italian businesses. Andy Halford, chief financial officer of the group, said around £4.4bn of the write-down related to increased competition in Germany. The company booked a £23.5bn impairment charge in its last financial year as a result of lower growth expectations across its operations, with Germany representing the bulk of the charge. Mr Sarin said he could not rule out further impairment charges if interest rates continue to rise.

Vodafone has signed a deal with Yahoo! to build a mobile advertising platform in the UK. The agreement will result in users agreeing to receive advertisements on mobile phones in exchange for discounted services such as music and video.

Mr Sarin has had a rocky year at the helm of Europe's largest mobile phone company after numerous downgrades in the company's growth prospects and a series of boardroom departures threatened his position. He also survived significant shareholder opposition to his re-election.

However, shares are trading at year-highs as investors have become more confident in the company's move to focus on growth in emerging markets while driving revenue from services like broadband and mobile advertising in mature markets. Vodafone's earnings in the first half of its financial year reached £6.2bn on revenue of £15.6bn.