Vodafone FY11 net dips 8.7% on impairment charges

Global telecom giant Vodafone Group today posted 8.7% decline in 2010-11 profit at 7.87 billion-pound, hurt by 6.15 billion-pound impairment charge for its Europe operations, specially Spain.

The UK-based company had profit of 7.87 billion pound for the year ended March 31, down 8.7% from 8.61 billion pound in the previous year, Vodafone said in a statement.

"We recorded impairment charges of 6.1 billion pound relating to our businesses in Spain, Greece, Portugal, Italy and Ireland, which were primarily driven by higher discount rates given sharply increased interest rates. The impairment in Spain represented about half of the total," Vodafone Chief Executive Officer Vittorio Colao said.

Revenue, however, rose 3.2% to 45.88 billion pound.

Despite the dip in profit, Vodafone said the company is well-positioned to deliver further value to its shareholders.

"We enter the new financial year in a strong position. We are gaining or holding market share in most of our major markets...We will continue to focus on our key growth areas of data, enterprise and emerging markets, while maintaining investment in network quality and the development of new services," Colao said.

Vodafone has forecast that its operating profit in fiscal 2012 will be between 11 billion pound and 11.8 billion pound.

Colao said its Indian business had registered an organic growth of 16.2%. "Our performance in India has been driven by increasing voice penetration and a more stable pricing environment," he added.

Last month, Vodafone also paid $5 billion to buy out its joint-venture partner Essar in India to strengthen operations.

Growth in India was driven by 39% jump in average mobile customer base and stable per customer usage trends.

These were partially offset by a fall in the effective rate per minute due to an increase in the penetration of lower priced tariffs into the customer base and strong competition in the market, Vodafone said.