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Last Updated: Tuesday, 29 May 2007, 17:38 GMT 18:38 UK
Vodafone's full-year profit dips
Vodafone store
Vodafone has been battling tough competition and regulatory pressures
Vodafone has unveiled a slight drop in full-year profits as it battles against tough competition in Europe and increased regulatory pressures.

Pre-tax profits before one-off costs slipped slightly to 8.75bn ($17.4bn) from 8.8bn last year.

But after costs of 11.6bn linked to write-downs in Germany and Italy - well down on a 23.5bn write-off in 2006 - it posted a pre-tax loss of 2.4bn.

Looking ahead, Vodafone said conditions were likely to remain tough in Europe.

Shares in the group rose on the London market rose to five-year highs after the results, closing 8.3 pence, or 5.5%, higher at 159.7p. Investors were buoyed by an 11.4% rise in underlying earnings per share as well as a similar increases in its dividend.


The word's largest mobile group has been squeezed by regulatory fines of 53m in Greece, restructuring costs of 79m across Europe and pricing cuts to retain customers.

These results show we have made good progress in the execution of our strategy
Arun Sarin, Vodafone

Last year the firm said it would focus its energies on expanding in lucrative developing markets, while also exploiting the convergence between communications platforms by offering new products to personal and business users.

While the firm has launched a fixed-line service for homes and business - which now has five million customers - it has also launched broadband services in five markets.

"These results show we have made good progress in the execution of our strategy," said chief executive Arun Sarin.

He added that the past year had "seen a further reshaping of Vodafone's portfolio, with our acquisitions in Turkey and India further increasing the group's exposure to the exciting growth opportunities in emerging markets".

Tough markets

Across Europe, the only market to make solid progress was its Spanish operation, which posted customer growth of 12.4%.

In the UK, customer numbers grew just 2.5%, with revenues edging 1.5% higher to 5.12bn. However, earnings in the region fell 10.1% to 1.46bn.

Despite its problems, Vodafone said it made good progress in emerging markets, delivering organic revenue growth of 41% in Egypt, 28% in Romania and 22% in South Africa.

At the same time, its recent acquisition in Turkey posted year-on-year revenue growth of 37%.

In April, Vodafone also spent 5.7bn on buying a majority stake in India's fourth-largest mobile firm Hutchison Essar, a move which it said provided "a very significant opportunity for future growth".

Vodafone now has more than 200 million customers worldwide and employs more than 60,000 staff. Of these, 10,000 are based in the UK.

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