Vodafone yesterday revealed one of the biggest annual losses by a European company but sweetened the news for shareholders with a bigger-than-expected dividend increase. Some 440,000 Irish people hold the stock as a result of Vodafone's purchase of the former Eircell in 2001.
Shareholders will receive a final dividend of 3.87 pence sterling per share (5.66 cent) on August 4th, bringing the full-year dividend 49 per cent higher to 6.07 pence. On an unspecified date after the group's annual meeting on July 25th, they will also receive the special once-off dividend of 10 pence per share that was declared in March when Vodafone sold its Japanese unit.
The world's largest mobile phone group booked a pretax loss of £14.85 billion (€21.72 billion) following a £28 billion write-down of its assets. The British -based group also unveiled plans to return an additional £3 billion to investors - on top of the £6 billion it had pledged to hand back following the sale of its Japan arm.
Arun Sarin, chief executive, who has come under fire as the company operates against a backdrop of price erosion, regulatory pressure and increasing competition, set out a five-point strategy to drive growth. It included plans to attack fixed-line markets within a year, eventually moving into fully-fledged converged mobile and PC internet services and even advertising.
The group will also increasingly manage its businesses on a per-country basis, and will outsource to reduce its £560 million annual spending on IT by 25-30 per cent within the next five years. Vodafone will also cut 400 jobs in its head office.
Its Irish unit, which has more than two million clients, continues to perform well, with voice usage per customer the highest among its European subsidiaries. "Service revenue grew by 5.9 per cent, primarily due to an increase of 9.2 per cent in total voice usage following a 5.9 per cent increase in the average customer base," the group said.
Vodafone's Irish customer base stood at 2.075 million at the end of March, up 123,000 on the previous year. The blended average revenue per user (ARPU) fell 1 per cent to €48.60 in the three months to March on the same period in 2005.
"While ARPU decreased, the corresponding total voice minutes in these quarters increased by almost 10 per cent, from 1.176 million to 1.289 million. This demonstrates that, though average spend is falling, customers continue to choose to use their mobile phones more, reflecting a significant underlying decline in usage costs," the group said.
Vodafone overall group revenue from continuing operations was up 10 per cent at £29.35 billion, while its pretax loss of £14.85 billion, compared with profits of £7.4 billion last year.
Operating losses were £14.08 billion, compared with a profit the previous year of £7.88 billion. That equates to a loss per share of 27.66 pence, compared with earnings of 8.12 pence.
