BRITISH mobile phone giant Vodafone today (November 15) said its first-half net loss doubled to more than €5 billion owing to a huge writedown for its Indian unit.
But a return to growth for its European operations helped Vodafone to post a hefty underlying profit, albeit slightly smaller compared with a year earlier.
Vodafone said its loss after tax soared to €5.1 billion ($5.5 billion) in the six months to the end of September compared with a net loss of €2.5 billion one year earlier.
Vodafone said it was hit by a gross impairment charge of €6.4 billion – or €5 billion after tax – “in respect of the group’s investment in India”.
“Competition in India has increased in the year, reducing revenue growth and profitability,” Vodafone chief executive Vittorio Colao said in the results statement.
“We have responded to this changing competitive environment by strengthening our data and voice commercial offers and by focusing our participation in the recent spectrum auction on acquiring frequencies in the more successful and profitable areas of the country,” he added.
India’s Reliance Jio is offering free unlimited 4G mobile broadband service till December 31, 2016 and unlimited free voice call and roaming service for lifetime.
Three of the country’s big telecom companies – Bharti Airtel, Vodafone and Idea Cellular – face challenges from the new entrant Reliance Jio, which is backed by Reliance chief Mukesh Ambani.
Vodafone said: “The Group intends to proceed with an IPO of Vodafone India as soon as market conditions allow. We do not expect this to take place during the current financial year.”
Stripping out the exceptional hit from India as well as interest payments, Vodafone posted pre-tax profit of €7.9 billion for the first half, a drop of 1.7 per cent compared with one year earlier.
Vodafone’s share price was up 0.2 per cent at 204.9 pence approaching midday in London, where the benchmark FTSE 100 index was 0.8-per cent higher.
Second only to China Mobile in terms of subscriber numbers, Vodafone earlier this month agreed to sell its Dutch fixed-line business Vodafone Thuis to Germany’s T-Mobile for an undisclosed amount.
The London-listed firm had pledged to sell the unit to win European Commission approval for the merger of Vodafone Netherlands with Liberty Global’s Dutch division Ziggo.
Vodafone has meanwhile warned that the future of its London-based headquarters is in doubt after Britain voted in favour of exiting the European Union.
EU membership has been important to Vodafone’s growth, with most of its 462 million customers and 108,000 employees based outside of Britain.