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Last Updated: Tuesday, 14 November 2006, 09:00 GMT
Vodafone's losses fall to 3.3bn
Man walking past a Vodafone shop

Vodafone made a 3.3bn half-yearly loss as it was hit by higher interest rates, competition and some of its assets being worth less than it thought.

However, it said that it was "on track" to meet key targets, with a pre-tax profit of 4.8bn before the one-off costs of 8bn were taken into account.

The company reiterated full-year predictions for a rise of about 5% in income from mobile calls.

It also announced an alliance with Yahoo on mobile phone advertising.

Under the partnership, Yahoo will use its technology to provide a range of mobile advertising formats across Vodafone's services.

And Vodafone customers who accept targeted advertising will get savings on some services.

Emerging markets

Chief executive Arun Sarin said that the European market remained very competitive, with falling revenue in the UK, Germany and Italy.

However, this had been offset with by a strong performance in developing markets - including Egypt, South Africa and Romania - as well as its Spanish operation.

Overall revenues increased by 4% to 15.6bn, compared with the same period last year.

Its loss was the result of an 8.1bn impairment charge - caused by higher interest rates, regulatory pressures in the German market and the writing-down of some of the value of its Italian division and of its Mannesmann business in Germany.

Vodafone made a 14.9bn loss in the 12 months to April 2006 - a record for a UK firm - after it admitted some of its assets were worth less than it thought.

And BBC Business editor Robert Peston said that the latest results highlighted "yet again" how Vodafone had spent too much on the wrong companies in the past.

"Revenues in its main European markets, the UK, Germany and Italy, are all flat," he said.

"They generate billions in cash flow, of course, but there's no growth from all the spending on 3G licences and the Mannesmann deal."

He added that the mobile phone operations of the US firm Verizon Wireless - in which Vodafone has a minority stake - was, by contrast, performing "brilliantly".

"What a difference there would be to Vodafone's share price if it had invested more on acquiring control of a US operation and less on Europe," he said.

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