Vodafone loses €6bn mainly due to Indian biz writeoff

UK market remains particularly poor performer

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Vodafone has reported a substantial loss of €6.1bn (£5.2bn) during its full-year results 2016/17, mainly due to a writedown of its Indian business.

The firm also posted disappointing figures for the UK. Earnings before interest, tax, depreciation and amortisation were down 16 per cent to €1.2bn (£1bn) on revenues, down 3.3 per cent at €6.9bn (£5.9bn) in organic terms (not accounting for the weakness of the pound).

Vittorio Colao, group chief exec, said there was no plan to flog off the UK business, despite its poor performance in a Q&A after the earnings call.

However, he said there was good potential in the UK to "improve margins" and intends to "play more aggressively" in the data space, as it intends to roll out plans to monetise customer data.

Dario Talmesio, principal analyst at Ovum, said that the UK was a "black sheep" for Vodafone partly because it has no fixed line or TV converged offering – unlike its competitors.

There have been ongoing talks between Vodafone and Virgin's owner, Liberty Global, regarding some form of a tie-in for some time in order to address this weakness. In March, The Register revealed the parties were back around the negotiating table.

In January, the pair completed a merger in the Netherlands to form a $3.7bn (£3bn) joint venture.

Talmesio added: "There is certainly an interest from both parties in doing something about it... the reality is they already know each other and, in my view, it is just a matter of time: whether that's next year or the year after."

Philip Carse, analyst at Megabuyte, agreed that the UK continues to be a problem child, being the only European operation to have seen revenues and EBITDA decline in organic terms during the year under review. "Some of this was homegrown (the billing issues) but the company generally remains a poor relative performer in a tough market."

Last year, Vodafone was slapped with a record fine of £4.6m by Ofcom for misselling to customers, inaccurate billing and poor complaints handling.

Vodafone said the issues were due to errors "during a complex IT migration", which involved moving more than 28.5 million customer accounts and almost one billion individual customer data fields from seven legacy billing and services platforms.

Colao said today: "The operational issues are essentially resolved. I don't call it rock bottom. The worst moment was six months ago. Six to nine months ago we were receiving twice the number of complaints. I was personally receiving complaints." ®


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