Vodafone has reported a loss, following a £3.8bn impairment hit due to the ongoing underperformance of its German business.
The telecoms giant announced a pre-tax loss of €1.4bn for the year ending in March, a stark contrast to the €1.6bn profit recorded the previous year, as reported by .
Vodafone explained that the impairment charges "reflect management's latest assessment of likely trading and economic conditions in the five-year business plan."
The company also noted a decrease in the current and future expected earnings performance of Germany. "The key driver of both changes is materially higher competitive density in the mobile market...impacting our expectations of future cash generation," the firm stated.
In Germany, total revenue dropped by 6 per cent over the period to €12.2bn, while pre-tax earnings plummeted 12.6 per cent to €4.4bn.
However, the company's performance in the º£½ÇÊÓƵ was more positive, with sales increasing by 3.4 per cent to €7.3bn and pre-tax earnings rising 10.7 per cent to €1.6bn. Overall global revenues rose 2 per cent to €37.4bn.
Vodafone shares dipped 0.6 per cent in early trade on Tuesday, although the stock has risen 4.7 per cent since the start of the year.
Vodafone's turnaround plan
These results mark the conclusion of a significant two-year transformation of the business under CEO Margherita Della Valle. During this period, the company sold its Italian and Spanish operations and secured approval for its massive £15bn acquisition of º£½ÇÊÓƵ rival Three, which is set to be finalised later this year.
Della Valle remarked on the transformation Vodafone has undergone since he presented his vision for the company two years prior: "Since I set out my plans to transform Vodafone two years ago, Vodafone has changed," and elaborated on the progress made: "We have delivered strong operational improvements across the business. Clearly there is much more to do, but this period of transition has repositioned Vodafone for multi-year growth."
Vodafone has faced challenges in Germany, corresponding with the unexpected exit of its German CFO, Luka Mucic, who announced his plan to depart "no later than" spring 2026. This will mark him as the shortest-serving CFO in the company's history.
After serving on the board since September 2023 and earning £760,000, Mucic chose to leave for the role of CEO at Vonovia, a leading German property firm listed on the DAX 40 index.
Moreover, Vodafone's German business was affected by new legislation concerning TV contracts within multi-dwelling units (MDU), effective from July 2024, leading to a customer loss of over four million, approximately half their total MDU customer base, which Vodafone stated was anticipated.
In his comments to the press on Tuesday, Mucic addressed the customer decline: "We originally felt that we would be able to counter [the fall in MDU customers] with an improved an accelerating performance in mobile but due to the heightened competitive intensity in the market, that did not come to full fruition."
"We have decided consciously not to save against that but actually lean into the challenge and continue to stimulate our turnaround and transformation."
