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Shares plunge for telecom giant Vodafone

European telecom giant Vodafone has seen a plunge in their shares by 11 percent after it reported a 9.5 percent drop in interim pre-tax profits and warned of a fall in revenue growth and profits margins next year. "Telecoms are not in great shape because the business models are not working particularly well. Vodafone`s business is OK today but the outlook is not great," says Peter Kysel, head of European Equities at MFC Global Investment Management.

Vodafone warned of a decline in mobile profit margins in the financial year ending in March 2007, blaming `progressively higher levels of mobile penetration` in its core European markets. Chief executive Arun Sarin describes the figures for the six months to September 30 as "another strong set of results."

Sarin says, "They show a robust operational performance. Vodafone has continued to outperform its principal competitors in Europe and the United States." Some analysts also expressed concern about the performance in the UK, which is one of Vodafone`s most competitive markets. Revenues were broadly unchanged at ?2.57 billion GBP ($4.4 billion USD), even though the company achieved an 8 percent gain in customer numbers in the U.K. to 15.76 million.