Vittorio Colao, chief executive of Vodafone Group, said the company had reached an “important turning point” with a return to organic growth in service revenue and EBITDA, although the picture was not completely rosy.
In organic terms, service revenue in the first half of the year increased 1 per cent to £18.43 billion, although this was down 3.7 per cent on a reported basis, while EBITDA was £5.8 billion, up 1.9 per cent in organic terms, but down 1.7 per cent as reported.
“We are achieving 4G leadership in Europe, organic revenue growth in fixed and enterprise and sustained commercial momentum in emerging markets, all of which is consistent with our long term strategy and which is being accelerated through our Project Spring investments. We also remain keenly focused on increasing efficiency and improving margins,” Colao said.
Vodafone also said that it had started preparations for an initial public offering of its Indian unit, “subject to market conditions”.
Contrasting regional performance
The company’s core European businesses continued to see service revenue pressure, down 6.2 per cent on a reported basis to £12.1 billion. Contrastingly, it saw Africa, Middle East and Asia Pacific service revenue growth of 1.8 per cent, to £5.9 billion.
For Europe, Vodafone noted “continued competitive pressures in a number of markets”, although revenue trends are improving. As far as its mobile business was concerned, continued contract customer growth and stabilising ARPU, supported by customer demand for 4G and strong data growth, was offset by declines in prepaid and ongoing regulatory factors.
In the first half, 25.8 per cent of Vodafone’s service revenue in Europe came from fixed line, compared with 22.6 per cent in the prior year. It has 12.5 million broadband customers, with 500,000 added in H1.
For AMAP, it said that “the fundamental drivers of these businesses – customer growth and strong demand for mobile voice and data services – remain very healthy”.
Vodafone now has 29.9 million 4G customers across the 19 countries in which it operates services, with 9.7 million added in H1. In total, it has 454.2 million subscribers, of which 121.5 million are in Europe and 332.7 million in AMAP.
In India, Vodafone is “geared up to launch new 4G services on the superior 1.8GHz band in five circles (Mumbai, Delhi, Kolkata, Kerala and Karnataka) beginning December 2015”.
For the period, the company reported a loss attributable to shareholders of £1.6 billion, compared with a prior-year profit of £5.5 billion, on revenue of £20.3 billion, down 2.3 per cent. Last year’s bottom line benefitted from a £5.5 billion tax benefit, while this year there was a £1.5 billion charge.
Group EBITDA for the first half of fiscal 2016 was £5.8 billion, down 1.7 per cent year-on-year.
Vodafone has slightly updated its guidance for the 2016 financial year, with EBITDA now anticipated to be £11.7 billion to £12 billion (its previous range was £11.5 billion to £12 billion). It expects to be free cash flow positive.
From 1 April 2016, Vodafone will change its reporting currency from sterling to euros.