[times] Vodafone said today that annual profits more than doubled to £8.7 billion despite taking a hit on its key Indian business.
The world’s second-biggest mobile operator by revenue said that it would take an impairment charge of £2.3 billion on its Indian division as a result of the introduction of spectrum charges for national mobile licences and an “intense” price war in the sub-continent.
Its final dividend per share increased by 9 per cent to 5.65p. Total dividends reached 8.31p, a rise of 7 per cent.
The group said that it would target a dividend per share growth of 7 per cent a year for the next three years.
Pre-tax profits grew to £8.7 billion for the year ended March 31, 2010, up from £4.2 billion in the previous year.because of growth in data and broadband use.
A £1 billion cost savings programme and signs of improved revenue trends in key markets such as the UK also lifted the company.
The Newbury-based operator said that revenues in the UK declined by 4.7 per cent in the year, with lower voice revenues and continued “intense” competition partially offset by higher messaging and data revenues.
Revenue for the group rose by 8.4 per cent to £44.5 billion, but stripping out acquisitions and foreign exchange, revenue declined by 2.3 per cent. Vodafone’s share price was up 2.95p, or 2.16 per cent, to 139.3p.
The company projects adjusted operating profit in the range of £11.2 billion to £12 billion for 2011 and expects to return to organic revenue growth during the year, although this will depend on the economic environment and the level of unemployment in Europe.
“Vodafone’s financial results exceeded our upgraded guidance on all measures,” Vittorio Colao, the chief executive, said. “We are creating a stronger Vodafone, which is positioned to return to revenue growth during the 2011 financial year, as economic recovery should benefit our key markets.”
Vodafone is participating in an Indian radio spectrum auction that will enable mobiles to offer high-speed internet. Bids for one set of nationwide 3G mobile spectrum licences reached $3.54 billion (£2.4 billion) on Monday, when most analysts had expected allIndia spectrum to cost between $1.3 billion to $2 billion.
On top of the auction, the Indian telecoms regulator has imposed a retrospective one-time fee for the 2G radio spectrum with high bandwidth that was won several years ago. The move has drawn fierce criticism from Vodafone as being “opaque, illogical and discriminatory”.
The combination of the auction and spectrum charge could put pressure on Vodafone’s cash generation because operators will have to spend billions more in a market in which call rates are among the cheapest in the world.
Vodafone profits double to £8.7bn despite price war in India
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