Fierce competition hits Vodafone profits

Guy Bentley
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Vodafone has reported a fall in group revenue of of 1.9 per cent to £43.6bn, with organic service revenue declining 4.3 per cent for the year to 31 March.

The company reported a hefty fall in adjusted profit before tax of 40 per cent to £6.5bn, while EBITDA came in at £12.8bn slighlty below the consensus of £12.9bn.

Despite strong performances in emerging markets Vodafone continues to face challenges in the more developed markets.

"In Europe, where we continue to face competitive, regulatory and macroeconomic pressures, we have taken steps to improve our commercial performance, particularly in Germany and Italy, and are beginning to see encouraging early signs", said chief executive Vittorio Colao.

However, Vodafone reported European smartphone penetration of 45 per cent, up seven percentage points from last year. The final dividend per share came to 7.4p per share.

The company took a small hit yesterday following news that telecoms giant AT&T is buying satellite television provider DirecTV.

The $48.5bn deal will create not only a storng competitor to other cable companies, but significantly lowers the odds that AT&T will continue considering buying Vodafone.

The merged firm will have around 26m video subscribers, with a broadband network reaching over 70m customer locations. It’ll be able to offer customers the industry’s holy trinity: phone, broadband and video services.

AT&T has been growing fast on the back of a pretty aggressive merger strategy. The DirecTV deal would give AT&T the size and clout it’d need to take on the Time Warner Cable and Comcast Corporation but, in addition to shunting Vodafone out of the picture, it also limits AT&T’s deal prospects outside of the US.

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