Vodafone reported a return to organic EBITDA growth in the first half and said it expects to reach the high end of its annual outlook. EBITDA increased 1.9 percent on an organic basis to GBP 5.786 billion in the fiscal first half to September, and revenues rose 2.8 percent to GBP 20.266 billion. Organic service revenue was up 1.0 percent year-on-year to GBP 18.430 billion, as growth of 6.4 percent in Africa, Asia and the Middle East offset a 1.3 percent fall in Europe.
Service revenue growth strengthened to 1.2 percent in Q2 from 0.8 percent in Q1. Vodafone said it still faced significant competitive and regulatory pressure, but seven out of 13 markets in Europe posted organic service revenue growth in H1. Second-quarter service revenue was down 1.0 percent on an organic basis in Europe, compared to a 1.5 percent fall in Q1, as particularly southern Europe showed signs of recovery. In the AMAP region, organic service revenue growth improved to 6.7 percent in Q2 from 6.1 percent in Q1, led by continued strong growth in data customers and traffic.
Vodafone's reported EBITDA was still down 1.7 percent in H1, and revenues fell 2.3 percent, hurt by currency effects. Vodafone said it will switch to reporting in euros from 2017 in order to limit the forex effect. The company posted a net loss for the first half of GBP 1.584 billion, versus a profit of GBP 5.501 billion a year ago, due to a provision for deferred tax after revaluation of assets held in Luxembourg. Adjusted earnings were down 4.6 percent to 2.51 pence per share on an increase in depreciation and amortisation after increased investments.
Its free cash flow moved to a negative GBP 541 million in the first half, due to high capital spending of GBP 3.708 billion under its Project Spring. The operator said it had reached 80 percent 4G coverage in Europe, and fixed broadband services were available to 66 million homes in Europe by the end of the period, of which 42 percent on-net. The company still expects positive cash flow over the full year, and Vodafone increased its interim dividend by 2.2 percent to 3.68 pence per share.
Vodafone said the results for the first half were in line with expectations. It expects revenue growth and profitability to improve in the second half, supporting the more positive outlook for the full year. Full-year organic EBITDA is now estimated at GBP 11.7-12.0 billion, compared to the earlier forecast of GBP 11.5-12.0 billion. Capital expenditure for the fiscal year is estimated at GBP 8.5-9.0 billion. The company also confirmed that preparations are under way to list its Indian unit on the stock market.
Vodafone ended September with a total 454.2 million mobile customers, up by around 5 million from three months earlier thanks to growth mainly in India and Africa. Fixed broadband customers increased by 230,000 in three months to 12.54 million. Vodafone said it also had 29.9 million customers using 4G in the 19 countries where LTE is available, up by 9.7 million in H1. Mobile data customers in the AMAP region also rose by 18 percent from a year ago to 124.6 million. This helped mobile data traffic increase 75 percent year-on-year in the fiscal first half.
