Vodafone suffers huge net loss on Germany hit but raises full-year outlook
British mobile phone giant Vodafone on Tuesday posted a huge post-tax loss for its first half, linked primarily to a writedown in Germany, but raised its outlook with total revenue increasing.
The telecom giant Vodafone faced a significant financial setback in Germany, resulting in a €4.85 billion ($5.45bn) impairment for the six months leading up to September. This was accompanied by a net loss of €4.79 billion in the first half of its fiscal year. However, the company raised its full-year outlook, anticipating adjusted earnings between €13.2 billion and €13.4 billion, up from the previous estimate of €13bn-€13.3bn.
Vodafone CEO Margherita Della Valle expressed satisfaction with the overall group performance, acknowledging that Germany was not yet at the desired level. The impairment was primarily attributed to changes in interest rates, following Germany's legislation that prohibited housing associations from bundling TV contracts with rent.
The company's revenue growth of 11.4% to €21.9 billion in the first half was partly offset by the consolidation of VodafoneThree, following the acquisition of CK Hutchison's stake in the UK joint venture. Vodafone also benefitted from the integration of Kenya's Safaricom and Telekom Romania.
Despite the recent losses, Vodafone managed to cut costs by more than €200 million in the first half, including staff reductions of 3,000 across Europe. French tycoon Xavier Niel, who became Vodafone's largest shareholder in July by paying €5.1 billion, was reported to potentially keep the pressure on the company, with the ongoing struggles in Germany being the next significant hurdle.
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Also reported by 1 other outlet
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