VODAFONE posted its first fall in annual revenues for seven years yesterday, forcing it to hold back a £2.1bn windfall from its US venture rather than hand it to shareholders.
The telecoms giant, the FTSE 100’s third-biggest constituent, said sales in the year were down 4.2 per cent at £44.4bn, as it was hit by the recession in southern Europe. Impairment charges on its Italian and Spanish businesses also sent pre-tax profits tumbling by 66 per cent to £3.2bn.
Although the UK’s most generous dividend payer increased its ordinary handout by seven per cent, chief executive Vittorio Colao said it would have to keep the £2.1bn paid out by Verizon Wireless (VZW), the US mobile network Vodafone owns 45 per cent of, in case it needs to up investment. VZW was the bright spot in Vodafone’s results, with the group’s share of the US firm’s profits up 32 per cent.
The contribution from VZW underlined the massive value of Vodafone’s stake in the US venture, which majority shareholder Verizon Communications has repeatedly made clear it wants to buy. Colao did not give any indication of whether he favoured selling the stake, which could fetch up to £100bn, yesterday.
“We are in a very comfortable situation because we have ownership of an asset that delivers important value,” Colao said “We continuously look at all assets, not just [VZW].”
The UK business also suffered, as it signed up fewer lucrative contract users than its rivals. Colao will hope for a boost from launching 4G, although the rollout has been pushed back to the end of the summer.