Vodafone posts solid Q1 as India, Turkey shine

Vodafone posts solid Q1 as India, Turkey shine
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First Published: Thu, Jul 19 2007. 03 22 PM IST
Updated: Thu, Jul 19 2007. 03 22 PM IST
London: Mobile phone giant Vodafone Group Plc posted robust first-quarter revenue and customer growth on Thursday as booming business in India and Turkey helped offset tough German and Italian markets.
Vodafone, the world’s second-largest mobile phone company by customers behind China Mobile, added 9.1 million subscribers in the three months to the end of June, topping most expectations and taking its customer base to around 232 million.
Group revenues climbed 7.5% to 8.3 billion pounds ($17.0 billion). Excluding acquisitions, organic revenue grew 4% as weakness in markets such as Germany and Italy cast a pall over a stronger performance in Spain and Britain.
Compounded by Vodafone’s move to slash once-lucrative prices for using mobile phones abroad, fiercely-competitive Germany posted a 6.3% drop in revenues. In Italy, where the so-called Bersani decree prohibits operators from charging top-up fees on pre-paid phone deals, revenues fell 3.1%.
But it was the first quarter boosted by Hutchison Essar, India’s third-ranked mobile group in which Vodafone secured a controlling stake for $11 billion in May. Vodafone said assets in India and Turkey had seen year-on-year revenue growth of 50% and 32% respectively, in local currencies.
Nomura analyst Martin Mabbutt said organic revenue growth was a touch weaker than expected, but was encouraged by subscriber growth that was almost double his forecast.
“Vodafone’s promotional activities seem to be bearing fruit,” he said, retaining a “buy” rating on Vodafone stock.
Vodafone shares climbed over 2% in early trade and at 0750 GMT stood 1.32% higher at 161.3 pence, valuing the business at about 87 billion pounds.
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Vodafone also said it continued to look at ways of maximising value of its 45% stake in fast-growing US telecoms group Verizon Wireless, which is controlled by US heavyweight Verizon Communications.
Small, activist investor Efficient Capital Structures (ECS) has called on Vodafone either to spin off the asset or create a tracker stock to crystallise the business’s value, setting the scene for another argument about the group’s US strategy at its annual shareholder meeting on 17 July.
Sarin, who noted that the value of Vodafone’s stake had risen by $10-15 billion in the last year alone, according to analysts, adding that the company expected its US venture to reinstate dividend payments around 2009.
But he told a conference call Vodafone was not just waiting for a payout.
“In a default sense, that is exactly what will happen. But frankly, there are other things that we might be able to do along the way that maximise the value for our shareholders. And that is what we’re staying alert to.”
He declined to give further information.
ECS, which owns just 0.0004% of Vodafone stock, is also calling on the company to pile debt on Vodafone’s “under-utilised” balance sheet by issuing 34 billion pounds ($69 billion) of new bonds and has added four resolutions to Vodafone’s agenda at its annual shareholder meeting.
Vodafone repeated full-year revenue forecasts of 33.3 billion pounds to 34.1 billion and adjusted operating profit of between 9.3 billion pounds and 9.8 billion.
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First Published: Thu, Jul 19 2007. 03 22 PM IST
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