Vodafone 3Q Organic Net Adds 5.4 Million

LONDON -(Dow Jones)- Vodafone said Wednesday that it produced its strongest quarter of net additions since December 2000 with over 5.4 million organic net additions, bringing the total proportionate customer base to over 151.8 million.

Arun Sarin, Chief Executive of Vodafone, said: "Overall these KPIs are in line with our expectations and we maintain our guidance for the full year to March 2005. "We have seen consistently strong performances across Europe and in the U.S., whilst we continue to focus on our turnaround programme in Japan.

"In the last quarter we saw record new Vodafone live! customer additions in our controlled base of 3.9 million, which contributed to a total of over 28 million customers across our controlled networks.

"This highlights our success in attracting and migrating customers to new services. Our customer proposition is enhanced by Vodafone live! with 3G and we have seen positive early indications following our launch in November."

The company said that ARPU trends continued to develop in line with expectations; non-voice services increased to 16.7% of controlled service revenue. The company said that in total it has over 400,000 Vodafone Mobile Connect customers, including over 170,000 3G enabled customers.

Vodafone also said that 2.4 billion shares were repurchased in the financial year to date at a cost of GBP3.2 billion.

The company said that Vodafone U.K. added 641,000 net customers in the quarter, taking the total base to 15.2 million
customers, an increase of over 9% since last year. It said that Churn has continued its improving trend due to ongoing
focus on customer retention and loyalty initiatives.
Blended annual ARPU reduced to GBP314 from GBP318 for the year to December compared to the year to September 2004, principally due to the impact of the reduction in incoming call termination rates of 30% effective from Sep. 1, 2004.

The growth in average customers more than offset the fall in ARPU and led to a 3% growth in service revenue for the quarter when compared to the same quarter last year. Excluding the effect of the reduction in termination rates, service revenue grew by around 7% in the quarter, Vodafone said.

The company said that Non-voice services as a percentage of service revenue for the year to December 2004 were 17.9%, up from 15.5% for the year to December 2003, with Vodafone live! customers now exceeding 3 million.

Net acquisition and retention costs as a percentage of service revenue in the quarter were stable compared to the same period last year, but higher than the quarter to September 2004 due to seasonal promotional activity.

The company said that net customer additions in Germany of 843,000 demonstrated continued strong growth in Germany and resulted in a closing base of 26.9 million customers, with churn remaining stable compared to the previous quarter.

Blended annual ARPU for the year to December was EUR303 compared to EUR305 for the year to September 2004, reflecting the impact of lower spending new customers. Bundled minute plans continued to be successful and have a positive impact on ARPU.

The company said that strong customer growth was the primary driver behind a 6% increase in service revenue for the quarter compared to the same quarter last year. Non-voice services as a percentage of service revenue for the year to December 2004 were 17.7%, up from 17.2% for the year to December 2003, benefiting from the increase in Vodafone live! customers to 4.3 million.

Vodafone said that net acquisition and retention costs as a percentage of service revenue in the quarter were lower than the same period last year, but higher than the quarter to September 2004 due to seasonal promotional activity.

The company said that in Italy proportionate net customer additions were 359,000 in the quarter, leading to a total proportionate customer base of over 17 million. Blended annual ARPU remained stable at EUR360 for the year to December compared to the year to September 2004. Churn also remained stable quarter on quarter.

Vodafone said that Service revenue for the quarter increased 8% compared to the same period last year. Non-voice services as a percentage of service revenue increased to 14.4% for the year to December 2004 from 12.7% for the year to December 2003, benefiting from a series of promotions throughout the year and an increase in total Vodafone live! customers in Italy to 2.3 million.

Net acquisition and retention costs as a percentage of service revenue in the quarter were higher than the same period last year, reflecting the increase in competitive activity in the Italian market. However, these costs remain at very low levels when compared to the rest of the Group.

The closing proportionate base in Japan was 14.8 million, reflecting net customer additions of 36,000 in the quarter. The Group's effective ownership in Vodafone Japan reduced from 98.2% to 97.7% following the completion of the merger of Vodafone K.K. and Vodafone Holdings K.K. on 1 October 2004.

Churn levels remained stable quarter on quarter, benefiting from the continued investment in customer retention activities and the introduction of new handsets. Blended annual ARPU fell to Y75,133 for the year to December 2004 from Y76,590 for the year to September 2004. The fall in ARPU reflects the competitive environment, increasing market penetration and growth in prepaid customers.

The company said that service revenue for the quarter decreased by 4% compared to the same quarter last year, due to the fall in ARPU. Non-voice services as a percentage of service revenue of 21.4% for the year to December 2004 were slightly lower than for the year to December 2003 due to the impact of competition.

Net acquisition and retention costs as a percentage of service revenue in the period were stable compared to the same quarter last year.

The Group will continue to focus on executing a successful turnaround programme in Japan throughout 2005 and into 2006.

Vodafone Spain said that it added 457,000 net customers in the quarter, bringing the total customer base to 10.9 million customers, an increase of over 12% on last year. Churn has improved both quarter on quarter and year on year.

The company said that blended annual ARPU continued to grow strongly, increasing to EUR408 from EUR400 for the year to December compared to the year to September 2004, benefiting from the focus on high value customers.

It said that the strong growth in ARPU and customers generated service revenue growth of over 20% year on year for the fourth successive quarter. Non-voice services as a percentage of service revenue increased to 13.1% for the year to December 2004 from 11.0% for the year to December 2003, with Vodafone live! customers increasing by over 700,000 in the quarter to reach a total of 2.2 million.

The company said that net acquisition and retention costs as a percentage of service revenue in the period were higher than the same quarter last year, reflecting the increased investment in acquiring and retaining higher value customers during the current financial year.

(END) Dow Jones Newswires"

Posted to the site on 26th January 2005