Vodafone Boosted by Verizon Deal

Vodafone Group PLC on Tuesday said it is making progress as the mobile telecom giant's full-year net profit soared following the sale of its U.S. wireless operations.

The world's second-largest mobile operator by subscribers after China Mobile Ltd. said net profit in the fiscal year to March 31 rose to GBP59.3 billion ($99.7 billion) from GBP413 million in the year-earlier period.

Earlier this year, Vodafone completed the landmark sale of its 45% stake in Verizon Wireless to U.S. counterpart Verizon Communications Inc. for $130 billion, for which it received a one-off contribution of GBP48.2 billion. The group also said it benefited from deferred tax assets, while last year's net earnings were hit by impairment charges.

Operating profit adjusted for exceptional items--a key performance metric--fell 37% to GBP7.87 billion, reflecting a five month contribution from Verizon, against a full 12 month contribution in the previous year. Vodafone guided for adjusted operating profit of around GBP5 billion.

Revenue fell 1.9% to GBP43.6 billion, versus market expectations of GBP43.4 billion, amid the company's high exposure to sluggish European telecom markets.

Vodafone said its emerging markets, which include India and Turkey, continue to deliver strong results, but it recorded impairment charges in Europe where there are macroeconomic pressures.

"It has been a year of substantial strategic progress," said Chief Executive Vittorio Colao. "[But] our operational performance has been mixed."

Newbury, England-based Vodafone is using a large portion of funds from the Verizon deal to improve network quality and speed across Europe, where high competition and a squeeze on consumer spending has dragged down sales.

Flush with cash, Vodafone is focused on deal-making in Europe's fragmented telecom sector as mobile operators seek fixed-line assets to shore up stagnating wireless businesses.

The group declared a fiscal-year dividend a share of 11 pence, up 8% on the prior year.

Write to Simon Zekaria at [e-mail]

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