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Vodafone, the world's largest mobile phone company, today warned that it will probably show a fall in profits this year as recession hits European consumers and businesses cut the number of calls they make.
European revenues fell for the first time since the company launched as one of the UK's first two mobile services in 1985.
Chief executive Vittorio Colao said, to explain the full force the recessionary woes are having on his business: "The economic downturn is affecting Vodafone in several ways.
"In our more mature European and Central European operations voice and messaging revenue has declined primarily driven by lower growth in usage and double-digit price cuts. Roaming revenues fell because of lower business and leisure travel. Business revenues slowed as customers reduced their activity and headcount."
But he went on to point out that Vodafone's geographic spread had given it some protection. While European revenues - excluding acquisitions - dropped by 1.7% in Africa and Central Europe they rose by 3.9%, in Asia Pacific and the Middle East they grew by 19% and in the US by 10%.
Vodafone said that operating profits for the year to March 2010 would now be only between £11 billion and £11.8 billion. In the year just ended operating profits rose 17% to £11.8billion on revenues up 16% at £41 billion.
Colao said Vodafone was giving a wider range of profit forecasts for the coming year partly because it could not predict when economies might start improving, was unsure when some cost savings would kick in and still wanted the chance to take any opportunities which came up to expand in growth areas like data.
In the meantime profit margins - which fell by 1.8% last year - are likely to decline by the same amount this year.
The mobile giant took £5.9 billion of write-downs largely as it wrote down the value of its Turkish and Spanish operations to reflect their lower value in the current climate.
Colao said that plans to save £1billion a year by 2011, which he announced in November, were being speeded up with a new target of achieving £650 million of that this year.
The dividend, as forecast in November, rises 3.5% to 7.77p.
