Vodafone group upbeat about FY; Q1 beats forecast |
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Mon, 25 Jul 2005 21:35
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LONDON: British-based mobile phone operator Vodafone today said it was very much on track to meet targets for the full fiscal year. The company said it had signed up 4.1 million new customers during the first quarter ending June 30, far exceeding market expectations (of 3.1 million). This was also considerably higher than the net new additions in last year’s Q1. The growth has pushed Vodafone’s total subscriber base to 165 million.
Revenues were boosted by strong performances in Spain and Italy, despite declines in Britain, Germany and Japan. Analysts agreed that the expectations were very much in line with expectations. 12-month annual revenues per user (ARPU) dropped from £306 (previous quarter) to £300 in Britain, from €299 to €295 in Germany; whereas in Spain it rose from €414 to €421 and in Italy it inched up to €360 from €359. In Japan the intense competition from giants like NTT DoCoMo and KDDI had pushed ARPU back from M ¥73,780 to ¥73,034.
Business in Japan did not match up expectations with revenues sliding by 4.1 percent when compared to Q1 last year despite steady revenues from mobile data services like video and e-mail services. Consequently, Japanese operations resulted in a loss during the quarter. Chief Executive Arun Sarin said the Vodafone group would continue to improve business in Japan.
The new total of 165 million customers included about six million from Vodafone’s acquisitions of Czech and Romanian wireless groups. Excluding these, the overall group revenues were still strong and showed 8.6 growth YOY.
UK operations were slightly disappointing despite the addition of 165,000 new customers during the same quarter. The slide in ARPU was due to regulatory cuts to the amount chargeable to fixed-line customers and increasing mobile phone penetration.
Churn rate – the percentage of subscriber base that the operator lost to rivals – was slightly higher than in May.
Barring these few declines, the group had fared well overall. Across Europe and the US, performance had been nothing short of robust giving the management the confidence to say full fiscal year targets could be met. The group forecasts free cashflow of £6.5 billion – £7 billion and revenue growth between 6 and 9 percent and a largely flat EBIDTA (earnings before interest, tax, depreciation and amortization) margin. The group is acknowledged as the world's largest cell phone group by revenue.
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