Total revenues for the fiscal first half declined 7.4 percent from a year earlier to GBP 21.78 billion, while adjusted operating profit improved 2.2 percent to GBP 6.17 billion, thanks to a strong contribution from Verizon Wireless. The net loss was GBP 1.89 billion, after GBP 5.9 billion in impairment charges on the Spain and Italy activities.
The mobile operator's free cash flow was down 16.7 percent to GBP 2.18 billion, hurt by the weaker euro and loss of the SFR dividend, and Vodafone said it now expects the full-year result to be at the low end of its earlier range of GBP 5.3-5.8 billion. It still increased the interim dividend 7.2 percent to 3.27 pence per share, and said it will use over half the dividend just announced by Verizon Wireless to start a share buyback worth GBP 1.5 billion.
For the second half of the year, Vodafone expects the weak economic climate in Europe to continue, while Verizon results remain sold. Despite an H1 performance slightly below expectations, it forecast annual adjusted operating profit at the high end of its earlier guidance of GBP 11.1-11.9 billion.
CEO Vittorio Colao said the company was making progress with its strategy to grow in non-voice and enterprise services as well as emerging markets. The recent roll-out of the Vodafone Red plans in Europe is the start of a major simplification of its offering, which will be based on transparent unlimited offers gradually enhanced with additional services such as storage, shared data, roaming offers and extra technical support to drive ARPU. The organisation will also be further simplified to eliminate non-customer facing costs and share support services and procurement more across countries. This should lead to GBP 300 million in cost savings in Europe in fiscal 2014, the CEO said.
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