Vodafone takes a hit of £4bn as crisis in the eurozone bites

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The Independent Online

Vodafone took a £4bn writedown on the value of its mobile phone operations in Greece, Spain, Portugal and Italy because of the eurozone crisis.

The chief executive, Vittorio Colao, described the economic climate as "difficult" as he made the "non-cash" write-off. Mr Colao was hopeful European leaders can resolve the crisis as the euro is good for business, but has taken "contingency measures" in case Greece is forced out.

"We need to plan for evwwery possible outcome," said Mr Colao, who has a long-standing policy of pulling cash out of individual countries on a daily basis. "Every night, from all the markets where we can – not just the eurozone area – we take cash into the central treasury."

The euro crisis means Vodafone is seeing "a broad divide" between southern Europe, where revenues are falling, and northern European countries, which are growing. Spain was particularly bad as revenues tumbled 9.4 per cent in the year to March. UK growth rose 1.6 per cent, as Mr Colao said Britons are leading the way in embracing smartphones that generate higher revenues from data. Emerging markets were the standout, with India up by a fifth and Turkey by a quarter.

Group turnover rose 1.5 per cent to £46.4bn, with pre-tax profits steady at £9.55bn.

Vodafone raised the dividend by 7 per cent, but when a special from US operator Verizon Wireless is added, the total dividend rises by 52 per cent, making it the most valuable in the FTSE 100 index.

Vodafone has also broken through the 400 million subscriber barrier, adding nearly 7 million customers in the quarter to reach 405 million. More than 80 per cent are now pre-paying contract customers who are more valuable than those on pay-as-you-go.

Mr Colao conceded that margins were being squeezed in some countries because the group was subsidising the cost of smartphones to encourage consumers to upgrade.

"This is not a mystery," he said, adding that the use of more sophisticated handsets meant customers were using their phones for more than just voice calls and texts. Data revenues surged 22 per cent in the year.

Mr Colao would not comment on Vodafone's £1bn move for Cable & Wireless Worldwide.

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