Economic issues in southern Europe create issues for Vodafone
Vodafone has stated that Group revenues have fallen by 4.2% year on year to £44.4 billion, the first full year drop for the mobile operator.
Net profit at Vodafone fell to a dramatic £673 million, far less than the net profit figure one year ago of £7 billion. Vodafone explained that this was largely due to a £7.7 billion write down on the value of southern European operations in Italy and Spain, which shot annual pre-tax profits down to £3.26 billion.
Verizon Wireless service revenue was up 8.1%, with Vodafone's share of profits up 30.5% to £6.4 billion. Verizon Wireless paid Vodafone, its 45% shareholder, a dividend of £2.4 billion in December 2012, with a further £2.1 billion due in June 2013, to be retained in the business.
Without the December payment from Verizon Wireless, Vodafone would have announced a net loss for the fiscal year, hence why the operator is ignoring shareholder calls for it to pay out the dividend.
On the positive side, Vodafone announced further good progress on data, with organic revenue growth at 13.8% and European contract smartphone penetration at 54.8%, up 9.9 percentage points year on year.
Meanwhile, Vodafone Red is now in 14 markets, with 4.1 million customers as at 12 May 2013. Vodafone is aiming to reach ten million Vodafone Red customers by March 2014, and to extend its 3G footprint at 43.2Mbps and LTE coverage across its five major European markets to around 80% and 40% respectively by March 2015.
Vittorio Colao, Group chief executive, commented: 'Thanks to further strong progress this year in our key areas of strategic focus, data, enterprise and emerging markets, and an excellent performance from Verizon Wireless, we have achieved good growth in adjusted operating profit and adjusted earnings per share. However, we have faced headwinds from a combination of continued tough economic conditions, particularly in Southern Europe, and an adverse European regulatory environment.'
Colao added: 'I remain very excited about our longer term prospects, as customer appetite for high speed data grows rapidly, and companies look to embed mobility into their corporate strategies. The launch of Vodafone Red has been very successful, providing a solid underpinning for future revenue as customers take advantage of the best of the Vodafone experience. Our new targets for high speed mobile network coverage, announced today, combined with our growing capabilities in next generation fixed line access, strengthen our Vodafone 2015 strategy.'