Vodafone in £6 billion write-down

Vodafone has suffered a £492 million half-year loss after being hit with a multi-billion write-down in the value of its business in southern Europe.

The company announced a £5.9 billion write-down in Spain and Italy, which prompted a fall in its share price.

Vodafone’s pre-tax loss for the six months ending September 30 compared to a profit of £8 billion in the same period last year.

It was hit by customers making fewer calls in the economically-depressed southern region, along with the weakening of currencies in its major markets.

It was also hit by a partial slowdown of growth in emerging markets such as India and South Africa.

“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,” chief executive Vittorio Colao said. “In the short-term, however, our results reflect tougher market conditions, mainly in southern Europe.”

However, Vodafone has been helped by the strong performance of its joint venture Verizon Wireless in the United States. It said it expected to get a £2.4 billion dividend from Verizon Wireless by the end of the year. Vodafone owns 45% of Verizon Wireless while Verizon Communications owns the other 55% in the joint venture.

Group service revenue, which reflects on-going income and not one-off items such as handsets, was down 1.4% in the second quarter.

Vodafone was hit by the drop of 11.3% in southern Europe business while the downturn in northern Europe was 0.7%. In emerging markets growth was 4.1%.