Vodafone attempts to draw a line under a turbulent year, committing to the UK after Indian losses

 
Oliver Gill
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Vodafone agreed to sell its Indian operations to Idea Cellular earlier this year

Vodafone today attempted to draw a line under a turbulent year, posting a €6.1bn (£5.2bn) annual loss due to a writedown of its Indian operations.

The telecoms giant announced its exit from India earlier this year by way of a $23bn merger with local rival Idea Cellular. Earlier today the firm said the deal had crystallised an after tax loss of €3.7bn, better than the €5bn impairment booked in November.

India’s falling revenues and earnings were replicated in the UK.

However, chief executive Vittorio Colao said of the UK: “I think the outlook for the country long-term is healthy, it is where you want to be.”

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Operational performance in the UK over the last year was hit by what analysts called a “nasty hangover”.

George Salmon, an equity analyst at Hargreaves Lansdown, highlighted mistakes made in the implementation of a new billing system in the final quarter of 2015. Earnings margins were almost half of those generated across the rest of Europe over the last 12 months.

“However, at the operating level Vodafone is still in the black, and the European businesses are improving nicely. Most of Vodafone’s woes stem from India,” said Salmon.

Colao said: “From an operational point of view we are back [in the UK].”

And the 55-year-old Italian welcomed initiatives by the government and regulators to push forward with greater investment in Britain’s fibre network.

It was about time this country had a view and a position on fibre. The whole world is going into a vision that has gigabit speeds and fibre as the backbone for homes, offices and public administration.

Britain was lagging behind. BT/Openreach was waking up to that, so that is a positive.

5G

The Vodafone boss rejected the notion the roll-out of 5G would be a watershed moment for the country.

Colao said there was a tendency for people to “fall in love with labels”.

“What is important is to have fast broadband, ubiquitously available everywhere. And it should be both fixed and mobile.

Is 5G important? Yes, but it is a journey. It is not a black and white.

The important thing is to have the vision and a strategy that says, ‘This country, 10 years from now has to there’. What will be the be the steps. There is no silver bullet.

The US owner of Virgin Media, Liberty Global, has been linked to a tie-up with Vodafone in order to better compete with the likes of BT and Sky which bundle broadband, mobile and TV packages together.

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Liberty Global and Vodafone have partnered on Netherlands’ Ziggo network. Despite Liberty Global’s owner John Malone calling the Vodafone chief executive a “fine fellow” there are no talks ongoing about a UK tie-up, Colao said.

He added: “We will look at strategic options if they present themselves.

We always keep an open mind and we engage with anyone who wants to discuss.

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