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Mobile network operator (MNO) Vodafone has been forced to swallow a £5.2bn net loss at the close of its financial year, after taking a multi-billion pound tax impairment at its troubled Indian business.
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Vodafone agreed to merge its Indian unit with local player Idea Cellular in March 2017, after trying and failing to crack the Indian mobile market, which is currently one of the fastest growing in the world, as local consumers flock to take advantage of improving 4G network availability.
Group-wide revenues at Vodafone fell 4.4% to £40.8bn, although on measures such as services revenues and earnings, there was some organic growth to be seen.
CEO Vittorio Colao focused on the positives in his formal statement: “Our focus on excellence in customer experience has enabled further improvements in our overall commercial and financial performance during the year.
“Sustained investment in network quality has enabled the platform to offer more generous plans to our mobile customers in Europe, stabilising contract ARPU [average revenue per user], and has allowed us to capture strong data growth in our emerging markets operations.
“We continue to be Europe’s fastest growing broadband provider, seizing the opportunities created by convergence and winning revenue market share, supported also by our Enterprise business which continues to outperform its peers,” said Colao.
However, Colao conceded on a conference call that Vodafone had endured a particularly difficult year in many regards.
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The CEO noted in particular the impact of a large fine from telecoms regulator Ofcom, imposed after an investigation found the company had seriously botched its migration to a new customer billing system and charged a number of pay-as-you-go customers to top up their phones while never crediting them.
The probe also found failings in Vodafone’s internal processes relating to its complaints-handling procedures, the regulator claimed Vodafone had not given customer service staff clear adequate guidance on what a complaint actually was, among other things.
Vodafone said it had resolved these challenges, with billing accuracy standing at 99.9%, and customer service levels now higher than those it was achieving immediately prior to the new IT system going live.
In spite of this, both fixed and mobile service revenues in the UK declined, and earnings dropped by nearly 16%. This decline was driven in part by increased costs resulting from sterling’s weakness post-Brexit.