Vodafone Group talked up the coming year as “another very important one for execution”, as it saw some positive signs toward the end of its financial year.
Vittorio Colao, chief executive, said: “We have seen increasing signs of stabilisation in many of our European markets, supported by improvements in our commercial execution and very strong demand for data. In fixed line, revenue trends are improving supported by accelerating customer growth, and our recent cable acquisitions provide a strong platform for further growth.”
“In emerging markets, our good growth trend has continued, driven by rising data penetration and leading network quality and distribution,” he continued.
In Q4, the company returned to organic service revenue growth, albeit by a slim 0.1 percent, after 10 quarters of shrinkage. Weakness in Europe by this measure (-2.4 per cent) was offset by strong growth in its AMAP region (up 6.0 per cent).
Vodafone also said that it is Project Spring network modernisation project is 63 per cent complete on the mobile side. Its 4G coverage in Europe is now at 72 per cent, with the company claiming to be Europe’s largest 4G operator.
However, Colao noted: “We have significant opportunities ahead of us, with only 13 per cent of our European mobile customers using 4G, and our market share in fixed services only a fraction of our share in mobile.”
On a group level the company has 20.2 million 4G subscribers in 18 markets.
On the fixed side, the company has 12 million broadband customers, with this business now representing 25.2 per cent of European service revenue. The integration of the acquired Kabel Deutschland and Ono businesses is “in line with expectations”.
UK broadband launch
Meanwhile Colao also confirmed Vodafone’s plan to launch broadband services in the UK, with a debut “in the coming weeks”. This will be augmented by a television proposition later in the year, as the company looks to boost its position in a market where quadplay services are increasingly becoming the order of the day.
On a group level, the company reported a profit of £5.92 billion, down 90 per cent year-on-year from £59.42 billion, on revenue from continuing operations of £42.23 billion, up 10.1 per cent year-on-year.
Its prior-year profit benefitted from a £48.12 billion gain from discontinued operations, related to its exit of the Verizon Wireless business in the US.
Profit from continuing operations of £5.86 billion was down from £11.31 billion, with the prior-year period benefitting from a significant income tax credit uplift.
Group service revenue of £38.5 billion was up 9.4 per cent year-on-year. Growth in Europe of 15 per cent to £25.97 billion was offset by a 0.8 per cent decline in AMAP to £12.04 billion although on an organic basis (taking into account M&A and foreign exchange changes) the picture was reversed, with a decline of 4.7 per cent in Europe, and an increase of 5.8 per cent in AMAP.
With regard to its European mobile service revenue, Vodafone said that it had seen a decline but with a “better trend in H2”, as it was impacted by “growing pressures from competition, regulation and macroeconomic environment”. The UK, Netherlands and Czech Republic all returned to growth in the latter part of the year, while Germany, Italy, Spain, Greece and Romania reducing their rate of decline.
Germany was highlighted as a market where Vodafone is underperforming. Service revenue was down 3.2 per cent on an organic basis (and excluding the acquired Kabel Deutschland business). Mobile service revenue fell by 3.5 per cent as prior-year price cuts took hold among the customer base.
AMAP benefitted from “strong customer growth, increase usage of voice and data services, and effective marketing and distribution”.
In India, as part of the Project Spring effort, 3G coverage in targeted areas has reached 90 per cent.