[Ben]

From the BBC: http://news.bbc.co.uk/1/hi/business/5028718.stm


Vodafone made a £14.9bn ($27.9bn) loss last year - a record for a UK firm - after writing down the value of assets.
It incurred one-off costs of more than £23.5bn after revaluing its German business Mannesmann, which it bought in 2000 for £112bn ($183bn at the time).

The firm said it would also cut 400 jobs as part of a move to reduce costs.

Excluding one-off costs, Vodafone made a £8.8bn profit and it said its overall performance had exceeded expectations, after adding 21 million new customers.

(article continues)

The article has a positive tone overall, but it's fair to recognise that Vodafone have been experiencing tough times.

[3GScottishUser]

The above appears to be a direct result of restructuring re the Mannesman deal some years ago and the increase in competition in most developed markets, especially Western Europe.

The UK arm of Vodafone has faired pretty well, increasing its customer base but has seen a higher rate of churn on pre-pay. More minutes have been sold but revenues have decreased, mainly because of the reductions imposed by Ofcom on termination rates and new initiatives like 'stop the clock'.

The Manchester Evening News reported:

In the UK, where the company has 16.3 million customers, Vodafone said revenues were 0.3% lower in a market it described as being one of its toughest. Operating profits in the UK were 10.4% lower at £698 million.

As part of plans to take on the likes of NTL and Carphone Warehouse, Mr Sarin wants to generate as much as 10% of its business in the next four years - around £3 billion - from converged services such as landline and broadband.

That will start with new tariffs offering cheaper calls on mobiles at home, as well as a possible tie-up with an internet provider to sell broadband under the Vodafone brand.

The company already offers cards which can be slipped into laptops to give high-speed internet access using the 3G mobile network.

But it is hoping that upgrading its 3G masts to carry a new, faster, system called HSDPA - already available in some countries - will also attract new business.

The idea is to potentially offer all four services - mobile, fixed-line, broadband and HSDPA internet connections - on one bill.

Investors welcomed the strong growth in operating profits and a 49% rise in the company's dividend.

http://www.manchestereveningnews.co.uk/business/s/214/214512_new_strategy_for_vodafone.html

Vodafone appears to be changing direction and despite the huge numbers in the headlines still has a very profitable business in the UK with rising customer numbers despite the increased competition. It will be interesting to see how the new converged products and services appeal and their effect on future performance. It appears that all of the big telcos have similar ideas about how the market will deveop. With Vodafone, 02, NTL/Virgin, Orange, BT and T-Mobile now actively pursuing converged services the opportunities for a mobile only provider looks limited.

[Ben]

The laying-off of 400 staff is being seen as a red flag by some. Everywhere seems to have taken a different take on Vodafone's figures, but as always it'll be time that tells.

[3g-g]

I've got a close friend who works for Vodafone and the it seems that most of the UK ops are going through the same thing just now, reduce operating costs and increase market share and revenue, with staff having to justify their wages and job roles currently. It'll only be a matter of time before O2 and T are doing the same thing. The UK is apparently one the most competitive & challenging market places in Europe, even with the millions of customers that all the ops have and the cash that the all bring in (billions of quid!).

Things are changing for everyone, there's now a dozen new GSM ops, numerous virtual ops, cellular operators offering fixed line and broadband, satellite TV companies offering broadband, cable ops doing mobile... it's all very blurred now. We'll see how things turn out over the next 6 months!

[miffed]

Sounds bad on the face of it - but if my bill is anything to go by they have probablly added it up wrong , or put a decimal point in the wrong place

... Not ver good at figure in my experience , Our vodafone :rolleyes:

[Hands0n]

As always the "market" is being driven by the shareholder divvy - even with posting such a huge loss, albeit helped greatly by their write-off, the shareholder got a 49% rise. See how essential the shareholder is, and how they need to be kept sweet under any circumstances. Try and get that in a salaried or self-employed job anywhere. The only other way of raising such a big increase would be to do a bank job!

But what happens when 49% is simply not enough? More job losses, sell-offs, write-offs? There is a finite number of times you can do that before the business becomes unviable. But what will the shareholder care? They'll just move on to the next Golden Goose.

Blimey! I'm beginning to sound like an anti-capitalist :D

The UK is indeed a horrendous market for technology these days. The pressure on the companies is for the retail price to spiral ever-downwards or the value offering to increase, margins are sacrificed for this purpose. The amount of choice in mobile networks is higher than ever before and is unlikely to shrink any time soon now. It may even grow if the MVNO model is seen as a way of increasing revenue to the core network supplier. Technology and sociological changes (i.e. handsets as fashion accessories) will drive the ever-hungry consumer, but the profits will not necessarily reflect these to any significant degree. The UK is a saturated market, and it will take rather special attractions to bring in the honey.

My forecast for the next 12 months is for a lot of confusing posturing and positioning of these businesses. BT is one to watch, they desperately want to be in on the act and talk the talk, but can they walk the walk?