The Vodafone Group said revenues for its fiscal first half to end September fell over 4 percent year-on-year to EUR 23.07 billion, mainly due to the deconsolidation of Vodafone Netherlands after the creation of joint-venture VodafoneZiggo, plus forex effects. The operating profit meanwhile rose 32.5 percent to EUR 2.00 billion, showing the company’s actions to improve cost efficiencies. Adjusted EBITDA went 4.2 percent higher to EUR 7.4 billion despite the deconsolidation drag. Net debt at the end of the half fell to EUR 32.05 billion from 37.9 billion the year before.
The company raised its full-year guidance for organic adjusted EBITDA growth to around 10 percent, from its previous guidance of 4-8 percent, to EUR 14.75-14.95 billion, heartened by stronger than expected underlying European revenue growth and the later than expected commercial launch of a new entrant in Italy. Also, regulator headwinds from roaming have been partially mitigated by strong growth in visitor revenues. Vodafone also upped its interim dividend per share by 2.1 percent to 4.84 cents. Capex, expressed as percentage of revenues, will likely stay in the “mid-teens”, for this year and over the medium term.
CEO Vittorio Colao said revenues grew organically in most markets, driven by mobile data. Enterprise revenues advanced, led by IoT, cloud and fixed services. Competition in India remained intense, though the CEO noted signs of positive developments, with the consolidation of smaller operators and recent prices increases from new entrant Reliance Jio. Colao added that the company is making good progress getting the necessary regulatory approvals for its merger with Idea Cellular and the monetisation of its tower assets. The company also pushed down operating costs for the second year running.
Looking ahead to the second half, Vodafone will continue to expand its fibre network in Germany, Portugal and the UK, push its entry into the consumer IoT market with the launch of “V by Vodafone” and the “Digital Vodafone” programme designed to enhance customer experience, increase revenues and refine cost efficiencies. The company noted that with the announcement to merge Vodafone India with Idea Cellular, Vodafone India has been excluded from group figures.
Group service revenue declined 5.6 percent but organic service revenue grew 1.7 percent in the half, and 1.3 percent in the second quarter. Vodafone attributed the slowdown in Q2 to its operations in Africa, the Middle East and Asia Pacific (AMAP), where growth slowed to 6.2 percent in Q2 from 7.9 percent in Q1. In Europe, service revenue fell 5.8 percent but organic service revenue in Q2 was flat (quarter-on-quarter) at 0.8 percent, with the increased drag from roaming regulation offset by an improved performance in mobile.
By region, Italy and Spain recorded robust growth, while Germany also showed growth. The UK marked declines in revenue while the rest of Europe recorded higher revenue growth. At VodafoneZiggo in the Netherlands, revenues fell 4.3 percent in the half, with the decline going wider in Q2 (5.2%) than in Q1 (3.4%), hit hard by regulation. Turkey (+14.3%), Egype (+22.8%) and Vodacom (+4.5%) performed well, while India (-15.8%) suffered from increased comptition. New Zealand growth was mild (+0.3%), with Vodafone Hutchison Australia’s going higher, in local currency (+2.5%).
Mobile data traffic, including India and joint ventures, grew by 88 percent (Europe +63%, AMAP +116%). Average smartphone usage continued to increase in both Europe and AMAP, with customers using 2.1 GB on average per month.
The Enterprise division showed service revenue going 0.5 percent higher in Q2, from 1.5 percent in Q1. Taking away the impact of regulation in Europe, growth was at 2.5 percent, unchanged from Q1. In Europe, service revenue in H1 declined 0.2 percent, while AMAP grew 6.8 percent. Growth in IoT continued, going to 12.7 percent in H1, mainly pushed by the increase in Sim connections (+36% year-on-year). Mobile services revenue slid to EUR 15.53 billion from 16.78 billion.
