Vodafone is not about to go bust even though it has just reported an operating loss of £14.8bn, a record for a British company, writes Richard Wray. The loss was caused by Vodafone's growing acceptance that a mobile phone network is not the money spinner it was a few years ago.
That was before an upsurge of competition and before regulators across Europe demanded that prices come down faster and there is also acknowledgement that assets it bought during the dotcom era are not worth nearly as much as the company paid for them.
The biggest deal that Vodafone - and in fact any British company - has ever done, was the £100bn acquisition of Germany's Mannesmann at the height of the dotcom boom. Today Vodafone wrote down the value of that business by a staggering £19.4bn.
In essence the writedown is Vodafone's acceptance of a new era for the business. Gone all the go-go days of the dotcom era when valuations were sky high and everyone believed mobility was the future.
Vodafone is also reining in costs - axing 400 head office staff in Newbury - and further job losses should be expected as the business adapts to the new world where big is not always beautiful.
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