Vodafone reports Sh692 billion net loss

Vodafone, the world's second biggest mobile operator, reported a 6.1 billion euro (about Sh692 billion) loss for the year to end-March, dragged down by the troubled Indian unit it is spinning off.

Seeking to reassure investors about the future however, the group forecast growth in earnings and a jump in free cash flow for the current year, driven by stabilising average revenue from its contract customers and lower spending.

It predicted a rise in organic adjusted core earnings growth of between 4 and 8 per cent and free cash flow of about 5 billion euros (about Sh567 billion), up from 4.1 billion euros (about Sh465 billion) in the previous year.

"We expect to sustain our momentum in the coming financial year, generating free cash flow of around 5.0 billion euros," chief executive Vittorio Colao said on Tuesday.

"Our confidence in the outlook is demonstrated by another 2 per cent increase in our dividend."

Vodafone's organic service revenue growth slowed to 1.5 per cent in the final quarter from 2.1 per cent in the third, due to regulatory headwinds in Europe that analysts say will ease in the year ahead.

Safaricom stake sale

Organic service revenue in Europe grew by just 0.1 per cent in the quarter, while Africa, Middle East and Asia Pacific grew 6.8 per cent, it said.

The British mobile phone giant, which is Safaricom's #ticker:SCOM parent company, is set to sell 35 per cent stake in the telco in a deal worth Sh266 billion.

Vodafone will retain a five per cent stake in the Kenyan firm and cede majority of its shareholding to South Africa-based subsidiary Vodacom.

Facing cut-throat competition in India, it has agreed to merge its operations with Idea Cellular.

Additional reporting by BDAfrica.com writer

Key CBK indicative rate used - 1Euro = Sh113.4306