Vodafone Group reported a loss for the first half of 2012, as a result of a nearly £6 billion charge related to its Spanish and Italian businesses.
In a statement, Vittorio Colao, Group CEO, said: “We have continued to make progress on our strategic priorities over the last six months, with good growth in data and emerging markets in particular”.
For the half year, the company reported a loss of £1.89 billion, compared with a prior-year profit of £6.64 billion, on revenue of £21.78 billion, down 7.4 percent from £23.52 billion.
Service revenue was £20.16 billion, down 7.9 percent.
The company recorded impairment charges of £5.9 billion for Spain and Italy, as a result of “challenging market conditions and changes to discount rates”.
Service revenue for Southern Europe fell by 18.1 percent to £4.98 billon. Service revenue for Northern and Central Europe fell 2 percent to £9.05 billion, and for Africa, Middle East and Asia Pacific it decreased 5.1 percent to £6.05 billion.
High spots included strong service revenue growth in Turkey, as a result of continued expansion of the contract customer base, strong growth in data revenue, strong growth in incoming traffic, and an increase in enterprise revenue.
India also saw solid growth, due to an increase in the customer base, increased usage, and an increase in charges for outgoing calls. Vodacom performed well, mainly driven by growth in Tanzania, Democratic Republic of Congo and Mozambique.
Weak points included declining service revenue in the UK, resulting from macroeconomic weakness and competitive pressure (partially offset by data revenue and the success of integrated tariffs) and general weakness in Southern Europe.
Vodafone also noted continued weakness in brand perception in Australia.
The company noted that revenue from non-voice services and emerging markets has increased to 65 percent in the first half fiscal of 2013 from 56 percent in H1 2011, “reducing our dependence on voice revenue in mature markets”.
While noting that the macroeconomic and regulatory environment in Europe presents significant short- term challenges, it is anticipating a “number of positive developments”. These include increased smartphone adoption, as mobile apps and low cost devices become more available in mature and emerging markets. It also said that with the broad deployment of high-speed data networks, it expects customer demand for data to increase significantly. And it said that the evolution of network and IT platforms should enable lower-costs and more standardised approaches as commercial and technology planning are integrated.
For the rest of the financial year, it expects the environment to be “similar” to that seen in the first half.
The company also announced it is due a dividend of £2.4 billion from Verizon Wireless by the end of 2012: a £1.5 billion share buyback will follow.