Vodafone Raises Full-Year Earnings Guidance

LONDON—Vodafone Group PLC on Tuesday signaled the continued recovery of its key European markets after raising its full-year earnings guidance despite swinging to a first-half loss on infrastructure costs.

The U.K.-based telecom giant reported a net loss of £ 1.7 billion ($2.57 billion) for the six months to Sept. 30, compared with a £ 5.42 billion profit in the same period last year.

Earnings before interest, taxes, depreciation and amortization fell 1.7% to £ 5.79 billion although beat analysts' forecast of £ 5.69 billion. Operating profit before exceptional items—a key performance metric—fell 6.5% to £ 1.64 billion.

The world's second-largest mobile operator by subscribers after China Mobile Ltd. said revenue excluding mergers, acquisitions and currency effects rose 2.8% to £ 20.3 billion, slightly above consensus forecasts of £ 20.2 billion. Revenue was down 2.3% on a reported basis.

Second-quarter revenue excluding handset sales, mergers, acquisitions and currency effects rose 1.2%. This is an improvement from a 0.8% rise in the previous three months and a 1.5% fall in the same period a year earlier.

In Europe, revenue on the same basis fell 1%—an improvement on a decline of 1.5% posted in the previous three months and the fifth consecutive quarter of improving performance. Vodafone also said the burden of regulation and macroeconomic pressures are easing in Europe.

"We expect progress to continue in the second half of the year," Chief Executive Vittorio Colao said, as the company raised guidance.

The Newbury, U.K.-based firm said it now expects full-year Ebitda of between £ 11.7 billion and £ 12 billion. It previously guided the bottom end of the range at £ 11.5 billion.

Vodafone also boosted its interim dividend by 2.2% to 3.7 pence a share.

For years, Vodafone has been stung by its high exposure to Europe's anemic wireless markets; a region where it generates most of its sales. Pinched consumer spending, intensive competition and regulation have combined to curtail the company's performance in its main geographies of Germany, Spain and Italy, as well as elsewhere.

Still, this year it has hailed the recovery of its key European business, backed up by deal-making and network investment to meet consumer demand for faster-speed mobile Internet data and media-driven offers.

Write to Simon Zekaria at [e-mail]

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November 10, 2015 04:15 ET (09:15 GMT)

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