Vodafone chiefs mull revival measures
Sunday, 26 May, 2002, 09:12 GMT 10:12 UK
Vodafone may write down its investment in China Mobile
Vodafone chiefs are mulling a £1bn spending cut, and writedowns of up to £20bn, to bolster failing investor confidence in the telecoms giant, reports said.
The firm, in a results statement on Tuesday, may reveal it is scaling back investment in its mobile phone networks by £1bn, newspapers said.
And Vodafone directors have spent recent days considering by how much to slice the value of takeovers such as Airtouch, bought for $62bn, and Mannesmann, taken over for £101bn, to reflect the continuing slide in the fortunes of telecoms firms, The Business newspaper said.
The value of stakes in China Mobile and fixed-line operations in France and Germany will also be written down, The Observer said.
Share slide
Vodafone's own shares have been among the worst hit as the shock waves from the 2000 bursting of the dot.com bubble have continued to affect stocks in technology, media and telecoms firms.
Vodafone is hoping that a robust statement on Tuesday will help revive a the price of its shares, which hit 92.5p earlier this month, compared with 399p in March 2000.
Tuesday's statement is set to reveal underlying full-year profits of £6-7bn, on turnover of about £22bn.
New takeovers?
But the firm is not expected to prolong a takeover moratorium pronounced by chief executive Sir Christopher Gent in an effort to reassure investors.
The firm is expected to argue that cash reserves, which stand at £6bn, would be best directed at snapping up telecoms firms at bargain prices while the sector downturn continues.
French mobile firm SFR is viewed by The Observer as one likely takeover target.
The cash is not expected to be spent on buying back shares to restore their price, most newspaper agree.
Vodafone shares closed on Friday at 113p.
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