Vodafone takes €1.9bn punch to wallet thanks to India's decision on airwave licence fees Vodafone reported a loss of €1.9bn (£1.6bn) in its latest half-year results ended 30 September, chalked up mainly to India's decision to change the way it charges telcos for using airwaves. In October, India's Supreme Court ruled against the industry in a dispute over the calculation of licensing and other regulatory fees, …
It normally goes to paying off the shareholders of the companies they've bought up, the banks for helping them issue the bonds and the accountants and lawyers for dreaming up the schemes.
I can't remember but I think they only finally got round to writing down the purchase of Mannesmann a couple of years ago. At the time the debt they created was something like £ 1000 (will different in the details but the scale is about right) per man, woman and child in the UK. That's the sort of thing you've been paying off and Chris Gent got a knighthood for it.
Selling off the towers is the first step to becoming just another MVNO… I wonder if people will start asking questions about who owns the tower infrastructure? Potentially far more serious than whether Huawei is one of the suppliers.
Of all the mysteries of capitalist democracy, the chief is why big firms spend all their energies splitting like amoebas and buying up each other's parts, up only to rinse and repeat again and again, instead of concentrating on their core competency and simply delivering a fine product for decades.
@Claverhouse
At some point splitting and buying becomes advantageous tax wise resulting in increased profits somewhere.
I always thought it odd BT didn’t buy O2 given they sold it a few years prior. Probably had too many tax implications and EE’s debt was likely attractive given BT could write that off against previous years profits thus contributing to reducing the overall purchase price. I guess it’s like buying a second hand car and claiming the loss in value vs a new car back against taxes paid to HMRC over the last years thus reducing the overall price paid for the car.
Or they simply viewed EE as a far better prospect/deal... and it also got Deutsche and France Telecom in as big like-minded Strategic BT Shareholders.
Telefónica are stuck with O2UK being remotely unable to offload it to BT or Hutchinson (3)... though 3 did buy O2 Ireland a while back. They only out I can see would be for them to try and off-load it to Comcast (Sky Mobile/TV).
Simple version:
As a general idea, 60-70% of large takeovers backfire and lose money, when using sane metrics like a normal person would.
Enter some MBAs and tax accountants, who will get bonuses for completing a transaction, who will be looking to minimise their tax bill. Say you make £100m profit, you could pay £25m tax, or buy a competitor to pursue growth, so now you are not making any profit - and not paying any tax.
At the extreme end, my opinion is that the banks highly encourage (read: corruption) to force this nonsense through. Reduced tax, increased bank profits and massive city finance bonuses (usually 2% of the total deal value) going to a select few in the know.
Sometimes though, it is just national companies buying firms from other countries, to form a "global" footprint. A big trend in mobile, as they transition from nationwide to global communications (pushed along by the EU regs on free roaming).
Vodafone is not a telecommunications company - it is a financial engineering company which happens to sell telecommunications services on the side.
The problem is that in order to survive in the current business climate, large publicly-listed companies need to exhibit this pathological behaviour, or be absorbed, asset-stripped, and cast aside by someone without scruples. If your company's return on capital employed is worse than the money-men can get from investing elsewhere, you are toast.
“ The company blamed its sluggish performance in Blighty on higher annual licence fees and "a reallocation of costs from capex to opex following our new Cloud partnership with IBM for Vodafone Business".
Plus their woefully shit customer service that sucks ass in a massive way, and as a valued multi-product customer a 20% price hike. ...Hence me dumping Vodafone Broadband for Sky. A single lovely lady - after many offshore fuckwits - in an Irish Call Centre managed to pull dumping the mobile too out of the fire.
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