Friday, 14 December 2018

Indian merger weighs heavy on Vodafone profits

By Chris Kelly, Total Telecom
Tuesday 13 November 18

Despite relatively good performance across its core business units, Vodafone's half yearly financials were decimated by losses incurred during the company's merger in India

Vodafone Group has posted a loss of €7.8 billion, in CEO Nick Read's first set of half yearly financials. Revenues also slipped to €21.8 billion at the telco. Vodafone attributed the loss to costs associated with its merger with Idea Cellular in India, a move that it hopes will deliver sustainable…

Vodafone Group has posted a loss of €7.8 billion, in CEO Nick Read's first set of half yearly financials. Revenues also slipped to €21.8 billion at the telco.

Vodafone attributed the loss to costs associated with its merger with Idea Cellular in India, a move that it hopes will deliver sustainable, cost saving synergies in the long run.

"Looking ahead, my new strategic priorities focus on driving greater consistency of commercial execution, accelerating digital transformation, radically simplifying our operating model and generating better returns from our infrastructure assets. Our goal is to deepen customer engagement through a broader offering of products and services and to deliver the best digital customer experience, supported by consistent investment in our leading Gigabit networks. We expect that this will drive revenue growth, reduce churn and lower our European net operating expenses by at least €1.2 billion by FY2021," Vodafone Group CEO, Nick Read, said.

Analysts echoed Read's comments, expecting Vodafone to double down on its converged product offering in the coming years, particulary in its European operations. 

“This was another challenging quarter. Everything points towards growth in convergence underlined by fixed line broadband, especially fibre; in some part this reinforces the acquisition of Liberty Global’s selected European assets. Retaining subscribers will be tough given the breadth of promotional offers especially in Southern Europe,” said Paolo Pescatore, SVP of Consumer Services at MIDiA Research.   

Read also said that Vodafone Group would create a virtual internal towers company to redefine the company's operating model and boost profitability.  

"We are reviewing the best strategic and financial direction for these assets. Our focus on organic growth along with the strategic and financial benefits of the proposed acquisition of Liberty Global’s assets give confidence in the Group’s ability to grow free cash flow, which underpins our dividend,” Read said.

 

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