TELECOMS group Vodafone returned to profit in the first-half, it announced on Tuesday (Nov 12), as the group closes in on a merger of its UK operations with rival Three.
Net profit totalled nearly 1.1 billion euros (S$1.6 billion) in the six months to the end of September, the British company said in an earnings statement.
That compared with a loss of 346 million euros in the same period last year.
Vodafone’s revenue gained 1.6 per cent in the first half to 18.3 billion euros.
Despite still awaiting final approval from competition regulators, Vodafone said it plans by early next year to wrap up the merger of its British arm with that of Three UK, owned by Hong Kong-based CK Hutchison.
The tie-up aims to create Britain’s biggest mobile operator with 27 million customers and to accelerate rollout of faster 5G connectivity.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Vodafone and Three UK have a target value of £16.5 billion (S$28.3 billion) for the new group.
Britain’s Competition and Markets Authority, which had expressed concerns that the merger could lead to higher prices, recently indicated that it would allow the deal to proceed.
“As we move through this year of transition, our results in the first half have been consistent with our expectations and we are reiterating our full-year guidance,” chief executive Margherita Della Valle said on Tuesday.
“We delivered good performances across our markets, with the exception of Germany, where we have been impacted as expected by the TV law change,” she added.
Vodafone has been undergoing a transformation under Della Valle, including the ongoing sale of its Italian unit to Swisscom for eight billion euros and the sale of its Spanish division to investment fund Zegona for up to five billion euros.
Last year the company axed 11,000 jobs, or more than 10 per cent of its global workforce, to slash costs.
Vodafone’s share price was down around six per cent late afternoon in London as investors particularly focused on the group’s weak performance in its top market Germany.
Legislation in the country has prevented housing associations from bundling TV contracts with rent.
Richard Hunter, head of markets at Interactive Investor, said on Tuesday that Vodafone was addressing “years of underperformance… with a major transformation of its business well underway”.
“What will emerge from the turnaround is a smaller and less geographically diverse, but more focused operation,” he added. AFP
