Vodafone to face a multimillion pound fine by Ofcom – report
Mobile phone giant Vodafone sought to reassure investors as it posted a €6.1bn (£5.2bn) loss Reuters

Mobile phone giant Vodafone sought to reassure investors as it posted a €6.1bn (£5.2bn, $6.7bn) loss, amid the merger of its Indian business with a rival.

The loss in the year to the end of March widened from a £5.1bn loss 12 months ago, as the world's second biggest mobile operator invests in its network.

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The group, which operates in 26 countries, wrote down the value of its Indian unit by €3.7bn after a major price war broke out last year.

But Vodafone forecasts a growth in future earnings and a jump in free cash flow for the current year, driven by stabilising average revenue from contract customers in Europe and growing its emerging markets.

It predicted a rise in adjusted earnings growth of between 4% and 8%, excluding its Indian unit, and free cash flow of around €5bn, up from €4.1bn compared with a year ago.

Chief executive Vittorio Colao said: "We expect to sustain our momentum in the coming financial year, generating free cash flow of around €5bn. Our confidence in the outlook is demonstrated by another 2% increase in our dividend."

The Newbury-based group will pay total dividends per share of 14.77 euro cents for the year.

Vodafone struck a deal to merge its Indian operations with local rival Idea Cellular in March to create the country's largest mobile phone operator, valued at more than $23bn. The Indian market faces cut-throat competition with a number of rivals offering low tariffs after the entry into the market of the Reliance Industries conglomerate.

Watchdog Ofcom fined Vodafone £4.6m for "serious" breaches of consumer protection rules in October, its largest fine to date for a telecoms operator.

The regulator said Vodafone had misled pay-as-you-go customers, charging them for top-up credit but "providing nothing in return".

Dhananjay Mirchandani, an analyst at Bernstein, said: "2017 numbers were not spectacular, though guidance for 2018 is a strong vote of confidence by the leadership team in Vodafone's business prospects. This a big and rather unwieldy tanker. The good guidance for 2018 has to be interpreted in that context."

Shares lifted more than 3% in early trading.