Vodafone aims to slash costs quicker after charge increase

By Kate Holton | May 20, 2009, Wednesday |

Print Edition

VODAFONE, the world's largest mobile phone group by revenue, is to accelerate cost cutting after increasing full-year impairment charges to 5.9 billion pounds (US$9.1 billion) due to problems in Spain and Turkey.

Vodafone also posted 2008-09 revenue, earnings and free cash flow in line with analyst forecasts yesterday.

In November, it said it would cut 1 billion pounds of costs to keep profit and boost free cash flow when saying conditions would be challenging.

Vodafone also set out forecast ranges for 2009-10 yesterday, but failed to give an exact revenue forecast after twice downgrading that target during the financial year just ended.

"These results demonstrate the impact of the early actions we took to address the current economic conditions and highlight the benefits of our geographic diversity," Chief Executive Vittorio Colao said in a statement. "Our 1-billion-pound cost reduction programme is ahead of plan and we continue to explore further ways to reduce cost. We maintain our tight focus on capital discipline and returns to shareholders."

For the 2008-09 year ended March, it posted revenue up 15.6 percent at 41 billion pounds, with earnings before interest, tax, depreciation and amortization up 10 percent to 14.5 billion pounds, both in line with forecasts.

Free cash flow was 5.7 billion pounds and adjusted operating profit at 11.8 billion pounds before impairment charges.

Vodafone said it would accelerate its cost cutting program, with over 65 percent to be achieved in the 2009-10 financial year, following the already reported problems in Spain and Turkey.

For the year just ended, Vodafone said more mature European and central European markets had seen voice and messaging revenue decline, while roaming charges also fell due to lower business and leisure travel.

In Europe, organic service revenue declined by 1.7 percent.

In contrast to Europe, Vodafone said results in Africa and India remained robust driven by continued but lower GDP growth and increasing penetration.

For the year ahead, Vodafone said operating conditions would be challenging in Europe.

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Vodafone aims to slash costs quicker after charge increase

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