Vodafone 3rd-Quarter Sales Up On Sterlings Decline

Vodafone has published its interim results - and reported that its third quarter sales rose 14 percent - driven largely by currency fluctuations and rising revenues from India. Sales in the three months ending Dec 31st. were £10.47 billion (US14.9 billion), compared to £9.16 billion (US$13.1 billion) a year ago. Ignoring currency changes caused by a sharply declining UK Sterling and acquisitions, sales would have fallen by 1 percent.

Vittorio Colao, Chief Executive, commented: "Our underlying performance showed similar trends to the previous quarter, with pro forma service revenue up 1.4% including India and at constant exchange rates. In the context of the current economic environment, we have continued to implement our strategy, with an emphasis on customer value, mobile data, Enterprise and fixed broadband. This has driven increased usage, 25% organic growth in data revenue and over 280,000 fixed broadband additions in Europe. We have also made progress on our plans to reduce costs by £1 billion by March 2011. Underlying guidance is confirmed."

The company is anticipating full year adjusted operating profit in the range of £11.5 billion to £12.0 billion, an increase of £0.5 billion. Free cash flow is anticipated to be in the range of £5.5 billion to £6.0 billion, an increase of £0.3 billion

Service revenue in India grew by 37.3%, or by 29.6% at constant exchange rates, with the rate of growth lower than the previous quarter due to the increasingly competitive market and an increased revenue base, although the current quarter showed a larger absolute increase in service revenue measured in local currency than the previous quarter. Roaming revenues were impacted by the terrorist attacks in Mumbai and economic pressures as customers traveled less.

The Spanish market - which was largely responsible for the profits warning last year, continued to perform poorly with organic service revenues down 5.8% - an even faster rate than in the previous quarter. Whilst new tariffs and promotions increased customer usage, they resulted in a lower price per minute which led to lower outgoing voice revenue. The deteriorating market environment put pressure on usage in some customer segments and led to increased involuntary churn. A termination rate reduction in the quarter contributed further to the decline in service revenue.

In the UK, positive news about mobile data services was offset by a decline in PrePay revenues due to declining voice traffic in that segment of the market.

Both Ireland and Portugal were impacted by deteriorating market environments during the quarter whilst Portugal was also highly impacted by a termination rate cut in August 2008 and Ireland by substantial price reductions in prepaid tariffs.

Africa & Central Europe revenue increased by 6.9%, with favourable exchange rate movements contributing 4.5 percentage points of growth and a 1.1 percentage point negative impact primarily from a change in the consolidation status of Safaricom.

Posted to the site on 3rd February 2009