Vodafone Raises Full Year Forecast - to Sell Remaining Softbank Stake
Vodafone has raised its full-year profit forecast, after its first-half sales rose 3.9% to £22.6 billion (US$36.5 billion) from a year ago. EBITDA however fell 1.2 percent to £7.36 billion (US$11.9 billion) in the six months to September, but beating analyst expectations.
Group adjusted operating profit increased by 2.7% to £6.1 billion (US$9.85 billion) with an increased contribution from Africa and Central Europe, Asia Pacific and Middle East and Verizon Wireless offsetting lower profit in Europe. Earnings were also affected by a £800 million impairment charge at its Greek subsidiary.
The company also announced that it will its remaining stake in Japan's Softbank in two lots over the next six months to raise a further £3.1 billion (US$5 billion).
Vittorio Colao, Group Chief Executive, commented: "I am pleased to report a further improvement in organic service revenue growth, together with upgraded guidance. We have also today announced an updated strategy, which positions Vodafone to realise further value from non-controlled assets, take full advantage of the most valuable telecommunications growth opportunities ahead and which will deliver sustainable revenue growth, stabilising margins and strong free cash flows."
In Europe service revenue declined by 1.3% with improvement in trends in Q2
where service revenue declined only 0.8%, reflecting continued growth in Germany
and the UK, an improved trend in Italy and
continuing weakness in Spain. Data revenue growth was 23.2% and fixed line growth was 4.4%. Operating costs in Europe including Common Functions declined by 3.4%, enabling further commercial investment. EBITDA margin declined 1.6 percentage points.
In Africa and Central Europe service revenue increased by 20.1%, reflecting favourable foreign exchange rate movements and the impact of the acquisition of a controlling stake in Vodacom in the prior year. On an organic basis service revenue increased by 4.8% , with continued growth in Turkey and Vodacom and stable trends in most Central European operations. EBITDA margins were stable.
In Asia Pacific and Middle East service revenue increased by 22.2% reflecting a strong contribution from India where service revenue grew by 14.7%, where Vodafone added 14.7 million customers during the period. The regional EBITDA margin increased by nearly 2 percentage points reflecting better margins in India as the company begins to gain the benefits of scale.
At Verizon Wireless underlying service revenue growth was 6.2%, the EBITDA margin was 40.0% and data revenue continued to grow rapidly. Free cash flow generation remained strong and net debt had reduced to US$14.3 billion by 30 September.