It’s not just Angela Merkel who has discovered PIGS in her ointment. Vodafone’s solid first half was (slightly) tarnished by a drop in the key service revenue metric in Italy (2.3 per cent) and Spain (9.6 per cent), while Greece received its second writedown in a year, bringing the total to £1.2bn.
Chief executive Vittorio Colao stressed the importance of remaining competitive in these markets while riding out the storm but also said consolidation is on the cards, with Vodafone actively looking at merger opportunities. Stronger European markets have performed well, with the UK beating estimates – service revenue is up 2.5 per cent – and Germany up slightly at 0.2 per cent.
The overall service revenue drop of 0.2 per cent in Europe was offset by strong growth in emerging markets, with Vodafone proving to be fairly recession proof.
From an investor point of view, the resumption of the Verizon dividend is manna from heaven. Vodafone now accounts for an astonishing £1 of every £8 paid out in dividends by FTSE 100 companies. Shareholders certainly have reasons to be cheerful.