Vodafone went through a dramatic few days on the Computing 30 share index last week.
The mobile network operator’s stock price was at one stage the biggest faller among the basket of 30 UK IT companies, after announcing a £28m financial write-off. It cut the value of the goodwill on its balance sheet associated with its German, Italian and Japanese businesses, because of lower growth prospects.
Goodwill is a financial mechanism often used to account for the difference between the cost of an acquisition and its actual value. Vodafone bought the German company Mannesmann for £101bn in 2000 when share prices in the telecoms sector were significantly higher.
But the firm’s shares rebounded after it revealed plans to sell its struggling Japanese business to internet group Softbank.
The moves come against a background of slowing sales growth in mobile markets.
Vodafone chief executive Arun Sarin says increasing competition is expected to cause revenue growth to drop to between five and 6.5 per cent over the next 12 months, against previous forecasts of six to nine per cent for 2006.
Julian Hewett, chief analyst at Ovum, says overall mobile growth will decline considerably over the next four years.
‘Growth in the mobile market is more or less over in mature markets,’ he said.
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