Vodafone takes big hit on Spain, Italy operations

AP News
Posted: Nov 13, 2012 4:39 AM

LONDON (AP) — Mobile communications company Vodafone Group PLC reported a big half-year loss after booking a hefty charge on its Spanish and Italian operations.

For the six months ending Sept. 30, Vodafone made a loss of 1.98 billion pounds ($3.18 billion), compared to a net profit of 6.68 billion pounds a year earlier.

Revenue fell 7 percent to 21.8 billion pounds largely because of adverse currency movements.

The company said Tuesday the 5.9 billion pounds ($9.4 billion) impairment charge for Spain and Italy reflected lower projected cash flows and increased discount rates.

Vodafone shares opened 3 percent lower at 161.55 pence on the London Stock Exchange.

"The wider market has held concerns over Southern Europe for some time now, and these numbers from Vodafone are uncomfortable proof that the financial fears are well-founded," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

Vodafone does stand to collect a $3.8 billion dividend by the end of the year from its 45 percent stake in Verizon Wireless, the U.S. joint venture with Verizon Communications Inc. Vodafone said it would use most of that dividend for a share buyback program worth 1.5 billion pounds.

The dividend announced Monday is the second from Verizon Wireless this year. In January, Verizon Wireless ended a policy of using its cash to pay debt, freeing up money to pay a $10 billion dividend to both owners.