Vodafone details robust performance - Mobile World Live

Vodafone details robust performance

22 MAY 2012

Vodafone Group announced a “steady” set of full year results, with a strong performance from its emerging markets and US (Verizon Wireless) businesses contrasting with core European holdings which continue to be affected by the “tough macroeconomic and regulatory environment.”

In a statement, Vittorio Colao, the company’s CEO, said that “our commercial performance and our ability to leverage scale continue to be strong, enabling us to gain or hold market share in most of our key markets, and reduce the rate of margin decline.”

The company reported a profit for the twelve months of £7 billion, down from £7.9 billion in 2011, on revenue of £46.4 billion, up from £45.9 billion.

Data revenue was up 22 percent year-on-year, to represent 14.5 percent of Group service revenue. It noted that in Europe, 44.9 percent of contract customers now own smartphones, with the proportion of these taking an inclusive voice, text and data service package at 76.9 percent.

Organic service revenue in Europe was down 1.1 percent year-on-year to £29.9 billion, although excluding the impact of regulated termination rate cuts, this would have been an increase of 1.4 percent. Vodafone noted “a broad divide between the more stable major markets of northern Europe, with Germany, the UK and the Netherlands all growing; and the much weaker markets of southern Europe, with Italy and Spain suffering from strong competition and a very poor macroeconomic environment.”

For its AMAP region, organic service revenue was up 8 percent to £12.8 billion, driven by its India (19.5 percent growth) and Africa (Vodacom – 7.1 percent growth) activities. It noted stabilisation after a prolonged price war in India, and strong growth in Africa “despite significant cuts on data tariffs.” In Australia, revenue “declined sharply” as the company continued to suffer from network quality perception issues.

Vodafone’s share of Verizon Wireless generated 42.2 percent of Group adjusted operating profit, with the US operator seeing “another very strong year.” It received a £2.9 billion dividend from this unit during the year.

The company reported a £3.5 billion gain on the sale of assets –SFR and Polkomtel – and a £4 billion impairment charge related to its businesses in Italy, Spain, Portugal and Greece. The company has now sold all of its non-controlling stakes except for Verizon Wireless, “where we believe future prospects for value creation and cash generation remain strong.”

Looking forward, Vodafone expects underlying growth in adjusted operating profit, with the weaker Euro offset by growth at Verizon Wireless. It expects “stability” in free cash flow, again noting the troubles of the Euro as well as the loss of a dividend from SFR.

According to Colao: “our goal over the next three years is to continue to strengthen our technology and commercial platforms through reliable and secure high speed data networks, significantly enhanced customer service across all channels, and improved data pricing models, to enrich customers’ experience and maximise our share of the value in the markets in which we operate.”

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Steve Costello

Steve works across all of Mobile World Live’s channels and played a lead role in the launch and ongoing success of our apps and devices services. He has been a journalist...More

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