Vodafone earnings will drop this year, in part due to rising costs, the British mobile phone giant has warned as it slashed the value of its European operations.
Vodafone’s share price slumped on Tuesday after the group forecast that underlying earnings – or profit before interest, tax, depreciation and amortisation (Ebitda) – would fall to between STG11.4 billion ($A20.81 billion) and STG11.9 billion in 2014/2015.
That compared with Ebitda of STG12.8 billion in 2013/2014, the company said in its annual results statement.
Vodafone, which has struggled for years with maturing markets in Europe, also took a STG6.6 billion charge against its assets in Germany, Spain, Portugal, Czech Republic and Romania.
Revenues dipped 1.9 per cent to STG43.6 billion in 2013/14, hurt by the pressures in Europe.
The grim news sent Vodafone’s share price diving 5.92 per cent to 204.29 pence on the British capital’s FTSE 100 index.
Vodafone also revealed that annual net profits rocketed to STG59.3 billion in the group’s financial year to March 31 but only because of a huge one-off gain.
Profits for Vodafone’s last financial year were skewed by the enormous sale of its stake in US joint-venture Verizon Wireless.
The London-listed group agreed to sell its 45-per cent holding in joint venture Verizon Wireless in 2013 to partner Verizon for STG$130 billion in a move to strengthen its strategy, boost infrastructure investment and slash debt.
Vodafone has also made a concerted push into the cable pay-television industry, amid broader consolidation in the global sector.
The British mobile phone giant has made strategic acquisitions including the purchases of Kabel Deutschland (KDG), the largest cable operator in Germany, and Spanish cable firm Ono.