Last year it was Spain and Turkey that hit Vodafone's earnings - the group's operation there took a hefty £5.9bn impairment charge in 2008-09. This year, it's India that's proving painful - Vodafone India, with over 100m subscribers, suffered a £2.3bn impairment charge.
That's because the group now needs a 3G network license to push through high-end mobile services. Yet 3G spectrum license prices soared to $3.4bn (£2.3bn) last week; that's about four-times the original reserve price. What's more, Bharti Airtel and Reliance Communications - the biggest mobile network operators in India - are fighting hard for market share.
With such challenges, comfort can at least be taken from Vodafone’s 44 per cent stake in Verizon Wireless - now the biggest mobile operator in the US. Verizon reported 6.2m net new customers in the period, bringing its overall user base to 92.8m; that meant a 23 per cent hike in Verizon generated sales for Vodafone, to £17.2bn, along with a 21 per cent hike in cash profits, to £6.7bn.
Overall, Vodafone did manage to beat analysts' guidance - largely thanks to a better final quarter. Indeed, revenue was up 2.4 per cent in Africa and central Europe and grew 5 per cent in Asia Pacific and the Middle East. So group cash profits rose 1.7 per cent in the period to to £14.7bn, although organic service revenue did fall by 0.2 per cent in the fourth quarter.
Still, the dividend looks set to remain tasty and Vodafone is targeting dividend growth of about 7 per cent each year for the next three years. That's underpinned by annual free cash flow of £6bn-7bn and should mean a dividend of no less than 10.18p per share by 2013. And there's a two-year £1bn cost saving programme, too.
Prior to these figures, brokers' consensus estimates for 2010-11 stood at pre-tax profits of £10.3bn and EPS of 15p.
ORD PRICE: | 135p | MARKET VALUE: | £71,066m | |
TOUCH: | 135-136p | 12-MONTH HIGH: | 154p | LOW: 111p |
DIVIDEND YIELD: | 6.2% | PE RATIO: | 8 | |
NET ASSET VALUE: | 172p* | NET DEBT: | 37% |
Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2006 | 29.4 | -14.9 | -27.7 | 6.07 |
2007 | 31.1 | -2.38 | -8.94 | 6.76 |
2008 | 35.5 | 9.00 | 12.6 | 7.51 |
2009 | 41.0 | 4.19 | 5.84 | 7.77 |
2010 | 44.5 | 8.67 | 16.4 | 8.31 |
% change | +9 | +107 | +181 | +7 |
Ex-div: 2 Jun Payment: 6 Aug *Includes intangible assets of £74.3bn, or 141p per share |