Vodafone Group Plc signalled increasing frustration with its key Indian unit on Tuesday, taking a charge of 2.3 billion pounds ($3.3 billion) due to fierce competition and rapidly escalating spectrum costs.
The impairment charge on the value of the India assets, along with comments by Chief Executive Vittorio Colao that India’s telecoms rules did not make sense, cast a shadow on otherwise solid full-year results. “We have seen very strong price declines. I don’t think these rules (on consolidation and spectrum) make sense. India needs investment. What India needs is investment and this will not come in an environment with too many operators.”
Vodafone Finance Director Andy Halford told reporters the impairment did not include any costs for a possible 2G bill and said the company expected to negotiate with the regulator.
Analysts said the impairment indicated Vodafone had overpaid and said problems in the Indian market (with over 100 million customers), overshadowed improvements elsewhere.
Group revenue declined 2.3 per cent to 44.5 billion pounds after excluding benefits from foreign exchange and acquisitions. Core earnings or EBITDA reached 14.7 billion pounds in the year ended March 31.
Free cash flow grew 26.5 percent, while capital investment was maintained at prior year levels. Vodafone said it would target dividend growth of 7 per cent a year through the next three years.