Vodafone makes writedown on European weakness
By Kate Holton
LONDON (Reuters) - Mobile operator Vodafone (VOD.L: Quote) made a writedown of 4 billion pounds ($6.3 billion) and cut its medium-term sales target as the debt crisis squeezed customers in southern Europe, forcing them to save money on phone calls.
Vodafone posted full-year results in line with forecasts and stood out from its peers by promising another strong dividend as strength in emerging markets and Germany, Britain and Turkey offset a slump in spending in Spain and Italy.
But with poor prospects for the two big European markets and regulatory and foreign exchange pressures, Vodafone said 2013 revenue growth would be slightly below its previous medium-term target of 1-4 percent.
Other companies have said recently their business has suffered from the turmoil in Europe, as governments chop public spending to try and solve the debt crisis, hurting consumers.
Vodafone made the writedown against its units in Spain, Italy, Greece and Portugal, all at the heart of crisis, with customers opting for lower tariffs and using their phones less.
"Europe continues to be challenging," Chief Executive Vittorio Colao told reporters. "But even though the macro economic conditions remain tough, Vodafone is well positioned for the coming years.
Organic service revenue at the world's biggest mobile operator, excluding one-off costs such as handsets, rose 1.5 percent in the year, with Europe down 1.1 percent and Africa, the Middle East and Asia Pacific up 8 percent.
The British-based group is the latest in a long line of major companies to report a knock-on effect from government austerity measures. Continued...