Vodafone hacks dividend as it reports €7.6bn losses for FY19

Vodafone investors are crying rivers this morning after the telco slashed a FY19 dividend payout to beef up its balance sheet. The disposal of operations in India contributed to steep losses. The cost-cutting organ reported a 6.2 per cent drop in group revenue to €43.7bn for the year ended March, with falls recorded in both …

[Anonymous Coward]

Seem to be a bit clueless

Vodafone shares have been headed down for a long time, seems the current management haven't got a scooby what to do. Poor customer service etc continues.

Doomed to take over in a decade? Seems like it if they don't sort themselves out.

[Anonymous Coward]

Re: Seem to be a bit clueless

Far less than a decade ?

[Anonymous Coward]

Re: Seem to be a bit clueless

I have directly or indirectly been a Vodafone customer since the company was founded.

Customer Service (or should that be Customer Disservice ?) has got worse in an exponential manner. It was certainly decent pre-2000. The first decade of the new millennium was passable. But now ? Its horrific !

Not only that, but there is zero loyalty recognition. Through my work I know of one account that has been a Vodafone customer (under the same name and account number) for at least 15 years and spending a decent chunk of money each month for the majority of those years. The only vague recognition of loyalty the customer got was when they finally got fedup with the state of Vodafone and called up for their PAC codes. At that point, the desperate offers being made by the sales-droid were quite extraordinary. However given the customer knew the post-sales experience at Vodafone, they pushed ahead with their migration.

[Anonymous Coward]

Re: Seem to be a bit clueless

When Vodafone closed Demon they gave me a "take it or leave" offer requiring the transfer of all my landline communications capability to them from other suppliers.

Instead I opted to move my broadband to A&A. For the first time in years I can watch BBC iPlayer without it repeatedly freezing - which then required a refresh to find the same point for a restart.

[Dabooka]

€27bn debt. Just let that sink in

How the hell any company is allowed to take on such numbers and still 'acquire' growth is beyond comprehension.

Someone needs to hit the stop button and reboot the whole system.

[Anonymous Coward]

Re: €27bn debt. Just let that sink in

Its not only tech companies, food companies such as the one I have apparently have nearly as much debt (I work for one which I believe has £** billion in debt)

[Anonymous Coward]

Re: €27bn debt. Just let that sink in

They have a choice, pay tax or pay interest, the interest is usually lower than the tax bill.

[Nick Kew]

Re: €27bn debt. Just let that sink in

Corporate debt is just one means of financing a company. People like lending money to companies like Vodafone: it's a better rate of return than putting it in the bank, and a much lower risk than holding shares (today's news cuts the dividend to shareholders, but doesn't affect bondholders).

The fly in the ointment is that the market is distorted by tax anomalies. Loan interest is paid out of untaxed money; dividends are paid out of taxed money. That encourages companies to over-use debt.

[Fatman]

Re: €27bn debt. Just let that sink in

<quote>That encourages companies to over-use debt.</quote>

But, here is the problem with debt:

You must service (pay off) debt; regardless of your revenue stream. Debt holders expect to be paid in accordance with the terms of their loan agreements. Default on them, and the shit may hit the fan. You better service that debt or else those loans might get called.

Cash flow dries up?? How do you find the funds to service that debt when income has dropped - by cutting costs? Often that means laying off employees. Laying off employees can signal the beginning of downward "death spiral". It most certainly hurt morale, and may cause some of your more valuable employees begin to wonder "if the handwriting is on the wall", and bail. Then you may be stuck with the 'less desirable' ones.

Shareholders knew that by investing in the company they would reap the feast; but also have to endure the famine. Debt holders just want their money.

[Nick Kew]

Re: €27bn debt. Just let that sink in

Not a problem while a company is healthy. Only when it runs into trouble, then the debt gets priority, and that can become a millstone around the company's neck.

It's akin to buying a house with a mortgage. If your income drops too far, you have a problem. If you hit negative equity, you may have a problem. But people still do it.

For what it's worth, Vodafone debt still trades above par, meaning the market is not worrying about a risk it might go the way of Debenhams (which couldn't service its debts). Or even companies like Premier Foods that got caught by its debt and zombified in 2008, but remains alive.

[Dabooka]

Re: €27bn debt. Just let that sink in

No it's not like a mortgage at all, your analogy is weak.

Yes I understand how corporate debt works, I really do, but anyone thinking that the €27bn debt mountain is okay as long as it's healthy (€7.6bn losses for FY19 isn't my idea of healthy) is crackers. Growth through acquisition is one thing, but crikey....

€27bn debt, a €7.6bn loss and some on here think it's 'fine'. Wow.

[pgeuk]

Could be worse...

Vodafone are having a fire sale here in NZ - https://www.stuff.co.nz/business/112701961/no-heroics-were-factored-into-business-case-to-buy-vodafone-nz-says-infratils-marko-bogoievski

[Nick Kew]

Re: Could be worse...

Interesting read. Yes, telecoms is highly competitive. AIUI Vodafone are looking for growth into new areas of connectivity, with IoT as a growth plan (deals like that with Amazon to offer free-to-the-user connections for Kindles look like an early prototype for that). But that too will be competitive and low-margin.

[tiggity]

To be expected

Vodafone have the reverse midas touch, everything they buy up turns to s**t

A total lack of clue about customer service makes things even worse.

Probably only inertia keeping a lot of their remaining customers captive.

[Anonymous Coward]

Re: To be expected

By closing the Demon service they probably lost the inertia benefit. I moved to A&A. More expensive than the offer Vodafone made me - but it seems to be the case that you get what you pay for.

[Andy The Hat]

I think I should feel for the shareholders

but quite why annual dividends of only about 7% is so terrible I'm yet to fathom ...