Vodafone tops expectations

May 19 2010 by Iain Laing, The Journal

MOBILE phone giant Vodafone has revealed that it has exceeded targets for the year after growth in data and broadband usage helped annual profits hit £8.7bn.

A £1bn cost savings programme and signs of improved revenue trends in key markets such as the UK also lifted the Newbury-based firm.

Operating profits of £11.9bn were ahead of the company’s previous guidance in February after revenues increased by 8.4% to £44.5bn in the year to March 31 – down 2.3% when excluding currency changes and acquisitions.

Vodafone said it expected a return to organic revenue growth in the current financial year, although this will depend on the economic environment and unemployment levels in Europe.

Revenue growth in emerging economies, in particular India and Africa, is expected to continue as the group boosts its presence and offers more data services in these markets.

The company said revenues in the UK declined by 4.7% in the year, with lower voice revenues and continued “intense” competition partially offset by higher messaging and data revenues. With Vodafone becoming the third network to muscle into the iPhone market, the decline in UK revenues for the fourth quarter slowed to 2.6% from 3.2% in the previous three months. Underlying earnings in the UK fell by 16.6% to £1.14bn.

At group-wide level, pre-tax profits were impacted by a £2.3bn write-down on the value of its India operation. This reflected intense competition and the award of six new national licences, although the operational performance has been strong since the company’s entry in 2007.

The group pre-tax profits figure of £8.7bn still exceeded last year’s £4.2bn after bigger write-downs in the previous financial year.

Chief executive Vittorio Colao said: “Vodafone’s financial results exceeded our upgraded guidance on all measures. Revenue trends have improved again in the fourth quarter, driven by growth in mobile data and fixed broadband.”