James Middleton

July 23, 2008

2 Min Read
Vodafone in buy back scheme

Global carrier Vodafone announced its intention to buy back £1bn of its own shares on Wednesday, following a 14 per cent drop in the share price to a 20-month low.

Shares dipped to £129.5 on Tuesday this week after the firm issued its interim results, projecting full year revenue at the bottom end of the outlook range of £39.8bn to £40.7bn.

The repurchase will begin immediately and, the company said in a statement, “reflects the Board’s belief that the share price significantly undervalues Vodafone.”

Vodafone’s results for the three months to June 30th showed group revenue up 19.1 per cent on Q207 to  £9.8bn. The bulk of the firm’s year on year revenue growth (12.5 per cent) was provided by favourable movements in exchange rates. Acquisitions and disposals, principally the Indian operation Vodafone Essar, made up 4.5 per cent of the improvement, with just 1.7 per cent coming from organic growth.

EMAPA revenue grew 9.2 per cent on an organic basis, down from 12.6 per cent in the previous quarter. This was due to lower growth in Egypt and Romania, Vodafone said, and the inclusion of Turkey within the organic calculation for the first time.

Group data revenue hit £664m for the three-month period, up from £441 for the same quarter in 2007, driven by improved penetration in mobile PC connectivity devices. The carrier had 6.7 million users of handheld business devices or mobile PC connectivity at the end of June, an increase of 105.4 per cent on the previous year. Vodafone also saw fixed line revenue of £613m for the quarter, benefiting from its acquisition of German broadband provider Arcor.

Voice revenue, meanwhile, declined by 3.6 per cent on an organic basis compared with Q207, which Vodafone attributed to lower per minute pricing as a result of new initiatives and regulatory pressure on roaming and termination rates.

CEO Arun Sarin commented: “Notwithstanding this more challenging operating environment, we continue to benefit from a diversity of assets and services, with strong revenue growth in EMAPA and another good quarter of data revenue growth offsetting weakness in Spain. Whilst we expect revenue around the bottom of the outlook range, our continued focus on cost reduction enables us to reiterate our operating profit and cash flow guidance for the year.”

About the Author(s)

James Middleton

James Middleton is managing editor of telecoms.com | Follow him @telecomsjames

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