Newbury-based Vodafone reports £6 billion losses, but is at ‘key transformation point’

Vodafone

Vodafone has announced its results for the year ended 31 March 2019. Reporting Group revenues of nearly £37 billion, the loss for the financial year of around £6 billion was primarily due to a loss on disposal of Vodafone India (following the completion of the merger with Idea Cellular) and impairments, as announced in November, the company said.

Organic service revenue (excluding handset financing and settlements in Germany, IAS 18 basis) was up 0.3% (Q4 -0.6%), as good performance in most markets offset increased competition in Spain and Italy and headwinds in South Africa.

But the company has cut its dividend per share to help boost its balance sheet.

Nick Read, Group Chief Executive, said: “We are executing our strategy at pace and have achieved our guidance for the year, with good growth in most markets but also increased competition in Spain and Italy and headwinds in South Africa. These challenges weighed on our service revenue growth during the year, and together with high spectrum auction costs have reduced our financial headroom. The Group is at a key point of transformation – deepening customer engagement, accelerating digital transformation, radically simplifying our operations, generating better returns from our infrastructure assets and continuing to optimise our portfolio. To support these goals and to rebuild headroom, the Board has made the decision to rebase the dividend, helping us to reduce debt and delever to the low end of our target range in the next few years.

“We are making strong progress on the priorities I described in November, supporting our outlook for EBITDA growth in FY20, with improving momentum in H2. Together with the strategic and financial benefits of the Liberty Global transaction, which we expect to close in July, this underpins our ambition to grow free cash flow and improve shareholder returns going forwards.”

The company said that operational highlights include deepening customer engagement: record low mobile contract churn in H2, over 1.0 million net additions in fixed broadband and 1.1 million in convergence during the year, and stabilising commercial trends in Italy and Spain during Q4. Accelerating digital transformation: actions taken to deliver over half of the net operating expense reduction target for Europe & common functions of at least €1.2 billion by FY21. Improving asset utilisation: 4G/5G active network sharing agreements announced in Italy and Spain, unlocking aggregate mid-term savings of c.€200 million per annum, and UK agreement extended to 5G; cost synergy targets accelerated in India and Netherlands.

The company is also optimising its portfolio. This includes completion of the merger in India and successful €3.2 billion rights issue; sale of New Zealand for €2.1 billion; actively exploring options to monetise its towers in Italy, the Netherlands, Spain and the UK and it is on track to complete Liberty Global acquisitions in July.

Vodafone was voted the UK’s best network in last year’s Trusted Reviews Awards for the second year in a row.