Vodafone Stick With 3G Investment

The Western Mail : Europe :MOBILE phone giant Vodafone was yesterday thought likely to stick by the price of third generation phone licences bought at the height of the telecoms boom.

Amid jitters from other phone operators, analysts expect the group to resist pressure to write down the value of its 3G investments.

Inset is Sir Christopher Gent.

Newbury-based Vodafone, which paid £14bn for its licences in Government auctions three years ago, unveils full-year results today.

The decision not to downgrade the value of the licences, coupled with a strong operating performance, should allow departing chief executive Sir Christopher Gent to leave on a high note.

He is due to step down in July after 17 years with the company, including the last six as chief executive. He will be replaced by Arun Sarin, a member of the group's board since 1999.

Vodafone is expected to tell the City that the carrying value of its 3G licences, which included £6bn paid to the UK Government, is justified because of the prospects for its network.

That contrasts with the comments of MMO2 last week after the rival operator fell £10.2bn into the red because of £5.9bn of 3G write-downs.

It blamed continued delays in launching the service and said there remained no firm evidence about the mass market appeal of the multi-media service. Third-generation phones allow far more powerful communications applications, including images and video.

Despite the decision to stick by 3G valuations, Vodafone is expected to write down the value of acquisitions to the tune of £14bn. Last year a similar move sent the company £13.5bn into the red.

Stripping out one-off costs, Vodafone is forecast to report underlying profits of £8.2bn, up on the £6.2bn unveiled a year earlier.

Nic Cardani, telecoms analyst at fund manager Gerrard's, said, "Vodafone is expected to comfortably meet expectations.

"The group is expected to continue to show double-digit revenue growth, margin expansion and cuts to capital expenditure, which will translate in very strong cash flow generation."

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