Vodafone has record loss of £13.5bn

Vodafone, the world's largest mobile phone company, today announced the biggest ever financial loss by a British company of £13.5 billion before tax.

But its chairman Sir Christopher Gent came out fighting his critics, saying underlying growth was even better than the City had expected.

Vodafone beat its own record loss of £8 billion in the previous year and dwarfed even the £5.7 billion loss recorded by Marconi last month.

However, underlying earnings, which the City regards as a better measure of growth, jumped by 54 per cent to £6.2 billion on sales up by 52 per cent, at £22.8 billion.

But Vodafone stunned the stock market when it decided it did not need to make any of the massive write-downs which had been predicted on the value of mobile phone business it bought at the peak of the telecoms boom. A write-down is a reduction in the estimated value.

Sir Christopher said: "There has been an awful lot of noise about write-downs. Who are these people making these awful noises? We, the board, demonstrated how strong the growth will be in the future and saw no need for write-downs of our mobile businesses. That was checked by our accountants."

He dismissed calls for his resignation and said: "If there has been misperformance by the company or the management then management is accountable for it. But, far from it, we have produced better than expected growth. If a company is in real trouble it does not produce free cash-flow of £2.4 billion, which is what we did last year.

"For people to claim that Vodafone has gone ex-growth when we showed an 87 per cent increase in data transactions such as texting is absurd. The share price may be rating us as a utility and I hope that it will start to catch up with events."

Vodafone did take a total of £6 billion in so-called "goodwill impairment", which reflects the difference between the prices it paid for businesses and their value now, but these all related to traditional fixedline telephone companies.

City analysts had forecast writedowns of between £15 billion and £25 billion, mainly on the value of Mannesmann, which Vodafone bought for £113 billion two years ago.

The scale of the loss and the small scale of the write-downs are expected to lead to renewed controversy over Sir Christopher's pay.

Last year he was forced to scale back a £10 million bonus to £5 million which gave him a total package of £6.07 million. This year his total pay is still expected to top £2 million.