Vodafone posts FY loss, sees stronger 2018

Tuesday 16 May 2017 | 08:26 CET | News
Update: 16 May 2017 | 10:23 CET
Vodafone Group reported a net loss of EUR 6.1 billion for the full year, due to writedowns on its activities in India, but said it expects underlying growth to improve slightly next year after it spins off the Indian business in a merger with Idea Cellular

Adjusted EBITDA including India was up 3.4 percent in its fiscal year to March, in line with the company's guidance of 3-6 percent growth. In the new fiscal year, Vodafone expects organic adjusted EBITDA growth of 4-8 percent, to EUR 14.0-14.5 billion, as continued cost cuts across the group help offset weak service revenue growth. 

Free cash flow is also expected to grow further this year, to around EUR 5 billion from EUR 4.3 billion last year. Capital expenditure was down 27 percent last year, after completion of the Project Spring investments, and the subsequent increase in cash flow helped the company raise its final dividend 2 percent to 10.03 cents per share. 

Total annual capex of EUR 7.7 billion was at 16.1 percent of revenue, and Vodafone said it expects to maintain a target of 'mid-teens' this year, as it upgrades its LTE networks and installs more fibre backhaul in preparation for 5G. It also plans more investment in data analytics, to develop more personalised offers for customers, and in upgrading billing and support systems. 

While reported annual revenue fell 4.4 percent to EUR 47.6 billion, organic service revenue was up 1.9 percent. Vodafone CEO Vittorio Colao said the company was benefiting from stabilising ARPU, after the network investment allowed it to offer bigger plans in Europe as well as grow data usage in emerging networks. Data traffic across the group was up 62 percent in Q4.

In the final quarter to March, organic service revenue growth slowed to 1.5 percent, from 2.1 percent in fiscal Q3, due to accounting and calendar effects, as well as increased regulatory headwinds, Vodafone said. Organic service revenue in Europe grew just 0.1 percent, while growth in Africa, Middle East and Asia Pacific (AMAP) was 6.8 percent.

Vodafone's results for the year exclude the Indian operations, which are now considered discontinued. It also excludes the VodafoneZiggo venture created in the Netherlands in December, which resulted in a one-time gain of EUR 1.3 billion. This helped offset in part the EUR 3.7 billion loss on the Indian activities, which was reduced from the EUR 5 billion impairment reported in H1 after the merger deal with Idea. 

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