Vodafone posts stagnant profit for full-year

UK-based carrier Vodafone revealed stability in its operations over the full year to end March 31, but recorded negligible growth.

In a posting on Tuesday, group revenue reached £46.4bn for the year ending 31 March, 2012, up 1.2 per cent on the £45.9bn posted in the previous year. Profit before tax stood at £9.55bn, a 0.5 per cent increase on the £9.5bn posted in the previous year.

The company blamed its relatively stagnant performance on the “tough macroeconomic and regulatory environment in much of Europe”, revealing that it had written down the value of its assets in Italy, Spain, Portugal and Greece by £4bn and organic service revenue in Europe was down 1.1 per cent  year-on-year.

However, there was growth in service revenue from data, from which it saw a 22.2 per cent increase in revenue. In addition, it performed well in emerging markets, revenue from India grew 19.5 per cent, Turkey grew 25.1 per cent, and the firm’s African subsidiary Vodacom saw revenue rise 7.1 per cent.

Vittorio Colao, group chief executive, described the year’s performance as steady, adding that the firm’s focus on the key growth areas of data, emerging markets and enterprise is positioning it well in a difficult macroeconomic environment.

“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.”

He added that the group saw a robust cash generation and dividend received from its 45 per cent stake in US operator Verizon Wireless.

“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 value in the markets in which we operate.”

Emeka Obiodu, senior analyst at Ovum, believes Vodafone’s ability to post encouraging results is largely down to the global scale of its operations.

“While operations in Northern Europe, Emerging Markets and the stake in Verizon Wireless all did well, operations in Southern Europe struggled. This is no surprise. Indeed, at a time of worsening economic conditions, especially in Greece, Italy, Spain and Portugal, it would have been too much of a miracle for Vodafone’s numbers in those regions to come out well. Spain and Italy were particularly hit hard. But Vodafone has worked hard to stabilize things as the impressive performance of data connectivity shows. Particularly, Vodafone’s effort to move customers to ‘integrated tariffs’ (bundle of voice, SMS & data) is welcome. Not doing so, while persisting with per unit pricing for voice and SMS, opens the way for OTT services such as WhatsApp and Skype to gain inroads in the market.”