Vodafone CEO Surprised By Market Reaction To UK Ebitda Decline

LONDON -(Dow Jones)- Vodafone Group Chief Executive Arun Sarin Friday said that he was surprised by the market's response to the company's lower than expected UK margins, which sent shares down by more than 4% in the day's trading.

Sarin told analysts in his closing remarks at the company's investor day in London that margin decline was resulting from increased investment in the UK market.

Analysts said Friday that UK margins were disappointing. Earnings before interest, taxes, depreciation and amortization, or Ebitda, margins for the UK stood at 26.6% for the five months ending February 2007. This compares with a UK Ebitda margin of 30.8% for the fiscal year ended March 31, 2006.

"I understand that people were looking at the previous year's margins, but we were out of the market last year, so that will mean that the margin was higher," said Sarin.

"This (the U.K.) is literally 5% of the Ebit for the whole company," said Sarin. "We have signaled in the past that we have had a good year and we have signaled to you that we will achieve guidance."

CEO Sarin added that the company was investing in refreshing customer tariffs, price bundles and would be affected by termination rate charges introduced by regulators.

"We don't see a free fall in (U.K.) margins," said Sarin, adding that Ebitda margin decline would be offset by other initiatives boosting revenues and cost reduction efforts.

"I am a little bit surprised that one can get that excited about a number," said Sarin. "All I can say is that the company is doing well in competitive and challenging markets."

Vodafone shares closed Friday down 6.1 pence, 4.3%, at 134.3p.

Company Web site: http://www.vodafone.com

-By Daniel Thomas, Dow Jones Newswires; 44-20-7842-9264; dan.thomas@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 30th March 2007