Vodafone retains top Irish spot despite share decline
Vodafone said its operations in Ireland, Greece, Spain and Portugal remain the "most directly impacted" by tough current market conditions, but the operator has retained its position as the country's biggest provider of mobile telecom services.
Shares in the group declined yesterday however, as Vodafone racked up a £1.88bn (€2.3bn) loss after it wrote down the value of its Italian and Spanish operations by £5.9bn (€7.3bn). It said it impaired the value of the operations because of lower projected cash flows and bigger discounts that it's offering.
During its 2011 financial year, Vodafone cut the value of its Irish arm by €1.14bn because it was forced to discount prices in order to retain customers. That was part of a €7bn impairment it took that year on its activities in Ireland, Spain, Portugal, Italy and Greece.
The company, which is headed by chief executive Vittorio Colao, said the loss in the first half of the current financial year compared to a net profit of £6.68bn (€8.3bn) in the first six months of the previous financial year. Ireland and Greece accounted for a combined 3pc of Vodafone's £6.68bn earnings before interest, tax, depreciation and amortisation (EBITDA) in the first half.
Revenue at the company, one of the world's largest telecoms operators, declined 7pc in the first half to £21.8bn (€27.2bn), largely due to adverse currency movements.
In its markets in southern Europe, Vodafone said service revenue fell 9.8pc in the first half and by 11.3pc in the second quarter.
Its performance in Italy "worsened significantly", it said, with service revenue there declining by 12.8pc in the second quarter.
That was due to both cuts in mobile termination rates as well as "ongoing competitive and macroeconomic pressures".
In Spain, second quarter service revenue slumped 12pc, while southern Europe EBITDA fell 15.1pc to £1.9bn (€2.3bn) in the period. It added that margins were eroded in Italy, Greece and Portugal, while in Spain they remained stable.
"The wider market has held concerns over southern Europe for some time now, and these numbers from Vodafone are uncomfortable proof that the financial fears are well-founded," said Richard Hunter, the head of equities at Hargreaves Lansdown in London.
Mr Colao insisted that Vodafone has "continued to make progress" on its strategic priorities, with "good growth" in data and in emerging markets.
"In the short-term, however, our results reflect tougher market conditions, mainly in southern Europe," he conceded.
Vodafone Ireland's mobile customer base remained stable, falling by just 3,000 to 2.2 million.
Just over 43pc of its customers here are now using a smartphone, while average monthly revenue per user remained static in the period.
The company also has 242,000 fixed-line and broadband customers in Ireland.