Vodafone Ireland sales rise to €985m but costs erase profit

Vodafone Ireland's sales last year grew by almost 4 per cent to €985 million, but the company said it slipped into the red due to investment in its network and the cost of plugging early losses at its Siro fibre joint venture with ESB.

Accounts obtained by The Irish Times for the 12 months to the end of last March show the group made a loss after tax of €11.4 million, compared with a profit of €47 million in the previous year.

The group’s directors directly attributed this to its network outlay, while the accounts also show a spike in the depreciation recorded on its asset base.

Vodafone said it has pumped €550 million into its network over the last three years. The directors also referenced Siro, which is currently rolling out a wholesale fibre network across ESB poles that will run high-speed broadband lines directly through the walls of adjoining homes and businesses.

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“As Siro is in the early stages of the network build, the joint venture is incurring a loss of which Vodafone Ireland takes a 50 per cent share,” Vodafone said.

The accounts show Vodafone swallowed about €11 million of Siro-related losses over the period. Its total investment in Siro is valued in the accounts at €87 million at the end of March.

Online services

Vodafone said it is selling more postpay-contract smartphones to its customers, who are consuming more data through the use of increasingly rich-content online services such as social media outlets and streaming services.

Data usage across Vodafone’s network was up more than 85 per cent last year, while the number of postpay contracts grew by 41,700, up 4.4 per cent. There are now one million 4G handsets in circulation.

Staff numbers directly employed across the group grew by about 100 to 988. Meanwhile, its directors, including chief executive Anne O'Leary, finance chief Sinead Bryan and strategy and corporate affairs director Ray Collins, shared a pay pot over the year of €1.8 million, up from €1.4 million.

The deficit in its defined-benefit pension scheme fell from €96 million to €81 million, while Vodafone Ireland’s overall net assets stood at €535 million.

The accounts were signed off days before Christmas by Ms Bryan and Mr Collins. In response to queries from The Irish Times, Ms O'Leary said the accounts represented a "strong year" for the company.

“Our focus for 2016 was on continuing the positive trend in our underlying business performance, while at the same time investing for the future of, not just our business, but of Ireland’s communications infrastructure,” she said.

She said the company remains committed to what she termed the “gigabit society . . . Our investment programme in 2016 and 2017 will contribute to making that vision a reality.”

Companies across the consumer telecoms space, including Vodafone, Eir and Three Ireland, are investing heavily in their networks to bring higher-speed services to customers.

Eir and Vodafone (via Siro) are mainly focused on fibre rollout, while Three has spent heavily overhauling its network following the integration that followed its acquisition of O2.