Vodafone sinks to four-year low

CEO Chris Gent has nothing to smile about as Vodafone tumbles

LONDON, England (CNN) -- Vodafone's shares dived to a four-year low on Friday morning after Europe's biggest mobile phone operator cut its forecast for its German and Italian businesses.

The company's stock dropped 8.5 pence, or 7.8 percent, to 100 pence, its lowest level since February 1998 at the start of London trading, and was trading at 99.5p in midday trading.

Vodafone (VOD) on Friday projected earnings before interest, tax, depreciation and amortisation (EBITDA) of 5.995 billion euros ($5.4 billion) for the two businesses -- D2 in Germany and Omnitel in Italy -- in 2002-03. But that figure was down 5.2 percent on July's published forecast.

EBITDA for 2003-04 was also lowered by 8 percent to 6.731 billion euros.

Vodafone claimed it had not revised its view of the company's current trading position or future prospects.

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"Nothing in this announcement should be interpreted as a revision of the company's views of the current trading position of future prospects of the company," Vodafone said.

But analysts were not impressed by the way the company buried the forecast in a statement about its intention to buy out the outstanding minority shareholders in Vodafone AG, formally known as Mannesmann, which it bought for $178 billion in February 2000.

"It's trying to pull a fast one," Arnab Roy Chowdhury, an analyst at Barclays Private Clients, told CNN. " Their projections are 5 to 10 percent lower on the figures it gave in July last year. The market is very, very concerned."

Chowdhury values Vodafone's stock at about 110 pence a share on the latest projections.

Analysts said this was the worst possible time for Vodafone to put out a statement as uncertainty continues about the prospects of growth in the sector and the heavy cost of investing in new technology. Telecom stocks have plunged by more than 70 percent since March 2000.

Vodafone's stock has fell 44 percent this year amid concerns it won't be able to boost growth and may be forced to slash the value of its German assets, an admission it paid too much for acquisitions at the peak of the telecom boom.

Germany remains a difficult market with too many competitors and stagnating growth. Vodafone said last month almost 400,000 subscribers had dropped its service in Germany.