Vodafone to 'stay in red'

One of Vodafone Australia’s co‑owners has warned the No.3 mobile carrier is likely to post further losses after it recorded a near‑$900 million loss over the past year. Hutchison chairman Canning Fok said he still expected Vodafone’s balance sheet to be in the red this year despite some stabilisation efforts.

Vodafone Hutchison Australia reported an $899 million loss for the last calendar year, a widening from a $420 million loss in 2011. The article also refers to the shortfall as about a $900 million loss over the past year.

Hutchison chairman Canning Fok issued the warning. Hutchison (Hutchison Telecom) holds a 50 per cent stake in Vodafone Hutchison Australia.

The article says Vodafone’s parents were forced to put $173 million into a lending facility after the Australian venture came close to breaching covenants on a $3 billion loan earlier in the year. That top‑up was paid to shore up the lending arrangements.

Yes. The article reports that Vodafone’s talks with its bankers continue as the company deals with sizeable losses and the covenant pressure on a large loan, matters that affect its financing and balance sheet stability.

Vodafone Hutchison Australia is a joint venture between Vodafone and Hutchison Telecom. The article notes Hutchison Telecom is owned by Asia’s richest man, Li Ka‑Shing.

Yes. HTAL (Hutchison Telecom Australia) — speaking through Mr Fok — said that although continuing losses were anticipated in 2013, it expected improvements in VHA’s performance through 2013 and into 2014.

The key points for everyday investors are that Vodafone Australia has posted large recent losses (around $899–$900 million), its parents have provided funding support to avoid covenant breaches, talks with bankers are ongoing, and the owners expect performance to improve into 2014 even though losses were still expected in 2013.