Vodafone takes hit in full-year results, but sees green shoots in Spain

Vodafone was hit by a perfect storm in its end of year results, leading the mobile and fixed telecom giant to cut its long-preserved dividend by 40% after it sustained a massive loss.

While the company’s €7.6 billion loss was primarily due to a loss on disposal of Vodafone India (following the completion of the merger with Idea Cellular, Vodafone was also hit by competition in key markets including Spain.

Including the VodafoneZiggo JV in the Netherlands, Vodafone had 13.6 million TV customers at the end of its financial year, stable year-on-year, with a significant decline in Spain offsetting some gains elsewhere.

Vodafone said it maintained good momentum in all markets except Spain, where it has struggled in the wake of its decision not to renew unprofitable football rights.

In the Spanish market, the company lost 49,000 TV customers along with 123,000 fixed broadband and 115,000 mobile customers. However, it saw an upturn in its fiscal Q4, with the addition of 36,000 TV customers and 1,000 broadband customers. Vodafone revamped its TV offering in Spain last month, with new thematic packs bringing more flexibility for customers.

In Germany, Vodafone’s biggest TV market, the company’s cable unit lost 92,000 TV customers, which it said reflected the loss of low ARPU basic access customers following the shut-down of analogue services.

Group revenue declined by 6.2% to €43.7 billion. The company posted an operating loss of €951 million, down €5.3 billion, primarily due to impairments totalling €3.5 billion in Spain, Romania and Vodafone Idea and €0.3 billion of losses from its equity associates and JVs, with losses in Vodafone Idea partially offset by gains at VodafoneZiggo and Safaricom.

CEO Nick Read said that the group had experienced “good growth in most markets but also increased competition in Spain and Italy and headwinds in South Africa. These challenges weighed on our service revenue growth during the year, and together with high spectrum auction costs have reduced our financial headroom”.

Read confirmed that Vodafone expects to complete its acquisition of Liberty Global’s German and central European businesses in July, following the final decision of EU regulators on the deal.

Vodafone has meanwhile confirmed that it will switch on its 5G service in the UK on July 3, the first time it has confirmed a UK date for 5G. The company has set a goal of building Europe’s largest 5G network, reaching over 50 cities by the end of 2020 following commercial launches during the summer.