Vodafone in overvaluation warning
Vodafone has warned its assets are overvalued by as much as £28bn and it faces a slowdown in revenue growth. The mobile phone giant said it would take a hit of between £23bn and £28bn - mainly on its German operations after its takeover of Mannesmann in 2000. Increasing competition will also see revenue growth slow to between 5% and 6.5% in the year to March 2007, against growth forecasts of 6% to 9% for 2006. As a result margins will slip in the next financial year, Vodafone said.
Analysts said the announcement would step up the pressure on Vodafone chief executive Arun Sarin. “It’s another incremental worsening of management expectations,” Robert Grindle, from Dresdner Kleinwort Wasserstein, told Reuters. “It will put Sarin under more pressure. The more the share price falls, the more pressure he will be under.” But Mr Sarin said the write-down and revenue warning would not affect Vodafone’s ability to return cash to shareholders through dividends and buying back shares.
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