Vodafone half-year profits £1.5bn in 'tough' conditions

Vodafone said it has found trading conditions in Europe tough, but hopes for improvement

Vodafone has reported a half-year pre-tax profit of £1.5bn ($2.4bn) as it said trading in Europe remained "very tough at present".

Chief executive Vittorio Colao said he had seen "intense macroeconomic, regulatory and competitive pressures during the period" there.

But he was "encouraged" by forecasts that Europe would return to growth.

Mr Colao said the emerging markets businesses were doing well thanks to the smartphone.

He said he hoped for a shift in regulation to support industry investment and consolidation.

Mr Colao said mature markets were "challenging", but that focusing on cost efficiency was helping.

The figure marks a big fall from its £3.9bn half-year pre-tax profit in 2012.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said the fall in profits was mainly due to Vodafone's difficulties in Europe.

He said there were some "issues under the bonnet", such as regulatory concerns and Vodafone's performance in India, as well as the "famously" competitive mobile phone industry.

But he added: "Nonetheless, the outlook over the horizon is bright."

TalkTalk cheers investors

Vodafone's results came at the same time as fellow UK telecoms firm TalkTalk revealed a £9m pre-tax loss for the six months to the end of September.

The drop compared with a £46m profit for the same period last year.

Despite the swing into loss, shares in TalkTalk rose over 10%, buoyed by the company's higher forecast for revenue growth.

It said this would be at least 3%, up from 2% for the full financial year.

TalkTalk, which offers broadband, fixed line and mobile telecoms and TV services, said the pre-tax loss reflected the investments it had made, mainly in its TV service, during the period.

The firm said it had signed up 167,000 new customers for its TV service in the three months to the end of September, putting it on track to have nearly a million viewers by the end of next year.

"We are delighted with the progress we have made in the first half," said Dido Harding, TalkTalk chief executive.

'Project Spring'

Meanwhile, Vodafone, the world's second-largest mobile operator said it plans to spend £7bn on improving its networks by March 2016.

The move follows Vodafone's deal in September to sell its US business to Verizon Communications for $130bn.

The US arm made up 45% of Vodafone's business, and the deal marked one of the largest to date in corporate history.

As part of its growth plan, "Project Spring", the introduction of 4G networks, will be accelerated and investment for laying fibre optic cables increased, to allow Vodafone to offer faster broadband to its customers.