Vodafone Posts 5.1% Rise in Q3 Revenue, Subscriber Numbers Reach 200 mil.   

The global mobile giant, Vodafone, has posted a 5.1% year-on-year (y/y) rise in revenue for the quarter ending 31 December 2006, thanks to a 14.4% rise in mobile services revenue at its EMAPA (Eastern Europe, Middle East, Africa, Asia/Pacific and Affiliates) operations. Total mobile revenues for the group rose 6.1% y/y, although growth in European operations was only 0.9%. The group said it added 8.7 million proportionate mobile customers in the quarter, taking the total proportionate customer base to 198.6 million by the end of December 2006. The company said that figure has nudged up in January 2007 to 200 million. Commenting on the result, the Vodafone chief executive officer, Arun Sarin, said the results are very much in line with its strategy. "I am also pleased to announce today that we now have 200 million proportionate customers globally and we are grateful for their confidence in us," he said. "This is both an important milestone for Vodafone and a great achievement by our people" (see World: 14 November 2006: Vodafone Posts 4.1% Rise in H1 Revenues, Announces New Impairment Charges).

In a statement, Vodafone said that it added 2.5 million 3G devices in the quarter, bringing its total 3G device base to 13.6 million. Mobile broadband services, via HSDPA, were already available in 21 of the group's markets and partner networks. Vodafone outlined several steps it has taken to boost profitability, including IT outsourcing, data centre consolidation, supply chain management and network sharing. The group said it had attained net proceeds of £3.1 billion (US$6.06 billion) from the disposal of its 25% stake in the Belgian mobile operator, Proximus, and the Swiss operator, Swisscom Mobile. Apart from mobiles, Vodafone said its "Vodafone At Home" package had been launched in seven markets, including five offering DSL services, and that "Vodafone Office" was available in 11 markets (see Switzerland: 19 December 2006: Vodafone Sells 25% Stake in Swisscom Mobile to Swisscom, United Kingdom: 13 November 2006: Vodafone Unveils Plans for UK Broadband Offer and Europe: 25 August 2006: Belgacom Buys Vodafone Stake in Proximus, Sells Stake in Neuf Cegetel).

Outlook and Implications

Robust Subscriber Growth in All Markets: Unlike in the previous quarters where some of the group's operations had reported declining subscriber figures, the group managed to grow its subscriber base across all its markets. In the six months to 30 September 2006, the group had lost customers in the United Kingdom, the Netherlands and Hungary. This time, subscriber numbers were all up, with the U.K. operation swinging from a 17,000 customer loss to a 652,000 customer gain. Within its European operations, Italy recorded the highest net customer gains of 792,000 customers, Germany had 709,000 and Spain took 440,000. In the group's EMAPA division, the South African operations (covering South Africa, the Democratic Republic of Congo, Lesotho, Mozambique and Tanzania) under the Vodacom brand added 1.08 million users, while the U.S. affiliate Verizon Wireless added 1.04 million customers. The group's Turkish operation continued its robust growth, justifying its supposedly excessive acquisition price by adding 567,000 customers in the quarter. The new EU country, Romania, also recorded impressive growth in the quarter, adding 562,000 customers.

Investments & Divestments Strategy on Track: After divesting from its operations in Belgium and Switzerland, Vodafone is unlikely to pull out of any of its operations in the next 12 months. Responding to questions about the group's mergers and acquisitions (M&A) activity, Sarin said it was highly unlikely the group would divest from Verizon Wireless in the United States and SFR in France. Instead, Sarin reiterated the group’s commitment to winning the bid for Hutchison Essar in India at a price that satisfies the group's stringent M&A code of practice. Sarin also hinted that the group was unlikely to pursue Hutchison Essar's parent company Hutchison Telecoms International Limited (HTIL), suggesting that it would bring up problems with shareholders. Vodafone also boosted its stake in Egypt by 4.8% to 54.9%, increasing its exposure to the high-growth Egyptian market (see India: 16 January 2007: Vodafone, Reliance Mulling Stake in Parent of Hutchison Essar)..

Mobile Data and 3G Services Continue to Grow: Faced with falling voice ARPU (average revenue per user), Vodafone has managed to boost its non-voice services revenue to an all-time high of 18.9% of total revenue. The United Kingdom operation led the charge, boosting its non-voice revenue to 23.2% from 21.7% in the previous quarter, with Germany close behind at 22.9%. However, Germany accounted for a larger proportion of non-messaging revenue, with data accounting for 8.4% of the total revenue, whereas revenue from data services in the United Kingdom remained at 6.6%. The group also reported rising number of 3G devices in use. Its European operations had a total of 12.53 million devices while its EMAPA division had 1.05 million devices.