Takeover costs hit Vodafone figures

Graeme Evans,City Staff,Pa News
Tuesday 13 November 2001 01:00

Mobile phone giant Vodafone reported strong growth on Tuesday despite seeing bottom–line figures hurt by a sharp fall in the value of its investments.

Vodafone exceeded City expectations by unveiling a 65% increase in half–year profits before one–off costs at £3.01 billion.

However, the Newbury–based company made an overall loss of £8.45 billion after taking into account acquisitions it made during the telecoms boom.

Those items detracting from Vodafone's figures include write–offs from Arcor, the German fixed–line telecoms business which Vodafone acquired as part of its takeover of Mannesmann two years ago.

But chief executive Sir Christopher Gent said the company's growth during the six months to September 30 had been "better than we expected".

"The immediate prospects for growth for the remainder of this year and next are

good," Sir Christopher said.

The company reported that its global customer base had increased by 15% to 95.6 million since March 31, while it had 12.8 million registered customers in the UK at the end of September.

Underlying earnings from its mobile businesses increased by 46% to £4.78 billion.

Sir Christopher said the overall group loss was an accounting matter and did not reflect the position of the company.

"The fundamental strength of the business is tremendous. We have got a good balance sheet with a low net debt ratio and an A credit rating."

He added that the September 11 terrorist attacks had not had a material effect on the group's results.

But there had been a small decline in revenues from customers using phones abroad following the drop in international travel, he added.Sir Christopher also warned against expectations of the "exceptional" growth

in customer numbers seen during previous Christmas trading periods.

Like other mobile phone companies, Vodafone was looking to increase revenues through data services and retaining higher value customers.

Average revenues per user in the group's German, Italian and UK operations increased in the second quarter, while non–voice business represented 9.9% of total revenues during September.

That compares with 8.1% during the year to March 31.

Sir Christopher said improving margins and launching new third generation phones were among priorities in the coming months.

The company did not have plans for further acquisitions or to increase the size of its investments during the rest of the financial year.

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