Vodafone Stops Payout To Shareholders After Huge Loss

By Glenn Dyer | More Articles by Glenn Dyer

A major about-face on maintaining its dividend payout and a loss in the latest full-year results from London based telco, Vodafone Group PLC help explains why the company wants to abandon Australasia through sales of its operating arms in Australia and NZ.

Vodafone said on Tuesday that it is cutting its full-year dividend, having increased payouts to shareholders without interruption since 1998, as it reported a loss for 2018-19.

The company declared a full-year dividend of 9 Euro cents a share, down from 15.07 Euro cents a share a year earlier.

The company had previously said it expected to maintain its full-year dividend unchanged on the year. But no longer.

Nick Read, Vodafone’s former CFO who has been in the top job since October, said the decision to cut one of the biggest payouts in Britain had not been taken lightly but showed the need to pay down debt and invest in the world’s second-largest mobile player.

Vodafone reported a pre-tax loss for the year ended March 31 of 2.61 billion euros ($US2.94 billion) compared with a profit of EUR3.88 billion in 2017-18.

Reuters said that the full-year results to the end of March showed the group came under intense competitive pressure in Spain and Italy, while impairments recorded earlier in the year pushed the group into a loss for the year.

Adjusted earnings before interest, taxes, depreciation, and amortisation – the company’s preferred profit measure–rose 3.1%, in line with the company’s guidance of around 3% underlying organic growth, Vodafone said.

But revenue fell 6.2% to EUR43.67 billion from EUR46.57 billion, the company said.

(Analysts had forecast revenue of EUR45.01 billion, according to FactSet)

Given that detail its no wonder the company sold its NZ operation to Kiwi company Infratil and the Canadian/Bermudian infrastructure investor Brookfield for $US2.3 billion ($NZ3.4 billion) and is looking to get rid of its Australian business via a merger with TPf Telecom.

But that has been blocked by the Australian competition regulator, hence the campaign against the decision from business media At Nine/Fairfax and News Corp papers.

For the year ahead, Vodafone forecast adjusted Ebitda would be between EUR13.8 billion and EUR14.2 billion.

Vodafone also said it is launching 5G services in seven cities across the UK on July 3.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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