Vodafone posts higher revenue, forecasts cautious year ahead

Vodafone posts higher revenue, forecasts cautious year ahead

	Published : Tue, 15 Nov 2005 14:05 By : Amy Watts Print this Story

LONDON: British mobile phone major Vodafone Group Plc. has posted a 9 per cent increase in its revenue to 18.3 billion pounds for the half-year ended 30 September. While its customer base went up by 10 million to 171 million during the period, it said its pre-tax profits slid by 9.5 per cent to 4.1 billion pounds.

The company, the world's largest mobile phone operator by revenue, warned that its struggling Japanese unit could affect profit margin in 2007. This sent its shares down 6 per cent.

The company announced that it will raise its share buyback programme by 2 billion pounds to 6.5 billion pounds for the year to next March. It is also paying a first-half dividend of 2.2 pence, an increase of 15 per cent.

Vodafone chief executive Arun Sarin said the company had incurred substantial costs in promotions and investments in trying to win customers in Japan, where it is pitched against entrenched market players like NTT DoCoMo.

The company had reiterated that full-year forecasts for revenue growth will be 6 to 9 per cent and EBITDA margins may be flat or down 1 percentage point. However, the half-year group margin had fallen by 1.5 percentage points to 37.9 per cent. In the light of this, the company was cautious about 2007.

It said higher levels of mobile phone usage and the greater impact of lower termination rates -- calls connected to other networks -- could reduce the rate of revenue growth. The organic revenue growth rate will be "slightly lower" in 2007 than in fiscal 2006. Free cash flow will decline in 2007, also hit by higher tax payments during the year.

Sarin said the company's focus on providing third generation, or 3G, services is paying off. At the end of September, it had 4.9 million users of 3G devices.

The company had sold its Swedish unit to Norway's Telenor ASA in a 1.04 billion euro transaction. The company mostly owns businesses where it is ranked first or second in the market. In Japan, as in Sweden, Vodafone owns the third-ranked mobile-phone operator.