Vodafone turns a profit; improves outlook

Vodafone, the “world’s biggest carrier in terms of revenue”, recorded a profit of £3.3bn during the six months to September 30, compared to a loss of £5bn during the same period last year.

The Big V also kept its monster revenues up, increasing sales by 9 per cent year on year to reach £17bn, driven largely by its operations in emerging markets.

The company recorded revenue growth of 33 per cent in Egypt, 24 per cent in Romania and 19.6 per cent in Vodacom in South Africa. Turkey also performed well with year on year revenue growth of around 28 per cent, as did India, with average net customer additions running at 1.6 million per month and year on year revenue growth of around 53 per cent.

Vodafone’s ultra low cost handset initiative, which pitches devices for as little as $25, has been going strong. In October, the initiative’s first month of sales, Vodafone sold 400,000 units in India. While, mobile money transfer offering, M-PESA, launched in February, has over 1 million users in Kenya.

The Western European operations are still battling competitive and regulatory pressures, with revenue growth of just 1.5 per cent, hitting £12.6bn over the six month period. Good revenue growth in Spain and the UK was offset by declines in Germany and Italy.

Over the six month period, the number of Vodafone 3G registered devices almost doubled to 21.4 million, from 11.1 million a year ago, while the number of proportionate mobile customers worldwide reached 241.5 million. Data revenues for the group also jumped 48.8 per cent to £967m, compared to £650m a year ago.

Following the acquisition of Tele2’s fixed broadband businesses in Italy and Spain, Vodafone now offers fixed broadband services to 3.1 million customers in 13 markets. Fixed mobile substitution continues to grow through fixed location pricing plans, with the company reporting 3.7 million Vodafone At Home customers and 2.6 million Vodafone Office customers.

Arun Sarin, chief executive, said, “These results reflect our continuing focus on the execution of our strategy. In Europe, we have performed well in competitive markets by driving strong growth in voice usage and data revenue, whilst improving cost efficiency. In EMAPA, we are capturing the revenue growth opportunities within emerging markets and benefiting from continuing momentum at Verizon Wireless.”

Sarin said he believes mobile advertising is a significant future opportunity for the mobile industry, highlighting commercial agreements for mobile advertising in eight markets.

“We expect market conditions and the pricing environment to remain competitive in Europe. Growth prospects for the EMAPA region remain strong as we actively pursue customer growth in markets where penetration is still increasing,” Sarin said, adding that outlook for the current financial year has been improved. “Group revenue is now expected to be in the increased range of £34.5 billion to £35.1 billion, primarily due to improved operational performance. Adjusted operating profit is also expected to be higher at £9.5 billion to £9.9 billion, reflecting better revenue generation,” Sarin said.