Data Growth Pumps Up Vodafone
Data was again the star as Vodafone Group plc (NYSE: VOD), which now has more than 252 million mobile customers worldwide, unveiled its third quarter key performance indicators (KPIs) Thursday. (See Vodafone Reports Q4 KPIs.)
Total revenues of £9.2 billion ($18.3 billion) were up 15.8 percent compared with a year earlier. On an "organic basis" -- discounting the impact of recent acquisitions and exchange rate movements -- total third quarter revenues were up by 4.4 percent. (See Vodafone Wins Battle to Buy Essar and Vodafone Completes Buy.)
The mobile giant’s revenues from data services (excluding messaging) grew by 51.6 percent to £558 million ($1.1 billion), while messaging revenues are still rising -- up 12 percent year-on-year to nearly £1.05 billion ($2.08 billion).
On an organic basis, data revenues were up by 41.5 percent, and messaging revenues up by 7.7 percent.
Overall, data and messaging income accounted for 19.1 percent of all third quarter 2007 revenues, compared with 17.9 percent a year earlier.
Europe is Vodafone’s data stronghold. Data revenues (excluding messaging) totaled £472 million ($934 million) in the third quarter, up 41 percent from £335 million ($666 million) a year earlier. Organic growth was 36 percent.
Voice revenues in Europe, meanwhile, were up by just 1.9 percent to £4.33 billion ($8.6 billion), or down by 2.2 percent on an organic basis (discounting exchange rate movements).
“As has been the case for some time in Europe, voice revenues were about flat, with large increases in minute volumes just about off-setting price declines,” notes Heavy Reading senior analyst Gabriel Brown.
“From a growth point of view it's all about data, which is growing strongly, albeit from a low base. A 36 percent growth in data is impressive, even if it's still only 8 percent of service revenue,” adds Brown.
And Vodafone is trying to stimulate further data service use in the U.K., where its 18.5 million customers (including 3.3 million 3G users) generated data revenues of £98.8 million ($196.4 million) in the third quarter: The operator is cutting its monthly mobile broadband tariff by 50 percent to £15 ($29.82). (See Vod Slashes 3G Prices.)
Brown says this comes as no surprise, though. “It really had no option on this. Vodafone traditionally commands a price premium in the UK market, but Three UK UK and T-Mobile (UK) have been offering mobile data services in the £10- to £15-a-month price range for some time now. Even with a brand as big as Vodafone's it was getting hard to justify charging twice as much as competitors for essentially the same service.”
Adds Brown: “Now that its pricing is competitive, the brand effect will come back into play, and I expect to see Vodafone's data revenues to continue to grow strongly as a result.”
It’s not only mobile broadband that is aiding Vodafone’s growth. As well as its massive mobile subscriber base, Vodafone now also has 3.1 million DSL customers across 11 markets, following its recent acquisition of fixed broadband businesses in Spain and Italy. (See Vodafone Buys Tele2 Units.)
The majority of those DSL customers are in Germany, though, where Vodafone’s Arcor AG & Co. KG fixed-line business has 2.4 million DSL customers. And at June 30 last year, the Italian and Spanish acquisitions jointly had more than 640,000 DSL customers. That means Vodafone has very few DSL customers in its other eight markets, including the U.K. (See Vodafone UK Launches DSL.)
Vodafone's share price currently stands at 173.7 pence on the London Stock Exchange , down 1.8 percent today.
— Ray Le Maistre, International News Editor, Light Reading