UPDATE: Vodafone Revenue Rises On Increased Data Usage
February 03 2011 - 7:46AM
Dow Jones News
Vodafone Group PLC (VOD.LN) Thursday reported solid third
quarter revenue driven by an explosion in the use of smartphones
for surfing the web, emailing and social networking, as well as
strong free cash flow generation.
Vodafone, the world's biggest mobile operator by revenue, posted
a 2.1% rise in group service revenue--one of the key figures
tracked by U.K. analysts--to GBP10.96 billion for the three months
to Dec. 31, slightly ahead of market expectations of GBP10.9
billion, underpinned by good growth in India, Turkey, the U.K. and
South Africa. It is the fifth sequential quarter of
improvement.
The company said data revenue continues to drive its growth
strategy and grew 27% on the back of "strong smartphone and mobile
connectivity sales." On an annualised basis, Vodafone's data
revenue is more than GBP5 billion, and exceeded messaging revenue
for the first time.
"Our performance has been driven by the effective execution of
our strategy to strengthen our businesses and deliver growth,
particularly in data services and emerging markets," Chief
Executive Vittorio Colao said.
By the end of December, Vodafone had launched its new
tiered-data pricing in eight European markets and by the end of the
current quarter will have rolled it out across all European
markets, he added.
Third-quarter group revenue rose 3% to GBP11.89 billion from a
year earlier.
Vodafone, which appointed a new chairman a day earlier, said
adjusted operating profit for the full year is now expected to be
towards the upper end of its guided range of GBP11.8 billion to
GBP12.2 billion, before the impact of the Verizon Wireless iPhone
launch in February 2011.
Free cash flow before licence and spectrum payments and one-off
tax related payments was GBP1.1 billion, lower than last year due
primarily to working capital movements. Cumulative free cash flow
generation to Dec. 31 of GBP4.6 billion was consistent with
Vodafone's expectations of free cash flow of more than GBP6.5
billion in fiscal 2011.
At Verizon Wireless, in which Vodafone holds a 45% stake,
comparable service revenue rose 7% in the third quarter, driven by
net customer growth and higher data revenue.
Service revenue on a comparable basis was up 7% in the U.K., 17%
in India, 32% in Turkey and 5.6% in South Africa. However, it was
down 7.4% in Spain, hurt by continued economic weakness, including
high unemployment and increased price competition.
Vodafone didn't provide profit figures for the third quarter but
will report full year results May 17.
Sanford Bernstein analyst Robin Bienenstock said the company's
results show "a stable core European market, notwithstanding
Turkey, and strong emerging market growth, making results much
clearer." She has an outperform rating on the stock and 240 pence
target price.
At 0818 GMT, Vodafone shares were down 1 pence, or 0.9%, at 176
pence, valuing the company at GBP92.48 billion. The stock has risen
30% over the past 12 months, outperforming the FTSE 100 index,
which has risen 13% over the same period.
Colao said text messaging services in Egypt, which have been
down since last week amid civil unrest in the country, will be
restored when authorized. Some of Vodafone's antennae are also down
in Egypt, but Colao couldn't say how many have been damaged or
turned off.
"It will be restored when we are authorized to restore it, and
of course we are very keen to have our customers enjoy the full
suite of services," Colao told reporters on a conference call.
U.K.-based Vodafone restored its voice services in Egypt on
Saturday, 24 hours after authorities ordered operators to shut them
down. Data was restored in the country on Wednesday, he added.
With regards to Vodafone's long-awaited sale of its 44% stake in
French telecom group SFR to Vivendi SA (VIVHY), Chief Financial
Officer Andy Halford said there was nothing to report.
Vodafone Wednesday appointed Royal Philips Electronics NV's
(PHIA.AE) chief executive and president, Gerard Kleisterlee, as its
new chairman, succeeding John Bond, who came under fire from some
shareholders last year over the mobile giant's strategy and track
record on acquisitions.
-By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290;
lilly.vitorovich@dowjones.com