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Vodafone Talks M&A, Mobile Adverts

Vodafone Group plc (NYSE: VOD) stepped up to the earnings plate today and did more than just deliver what analysts have called a "solid" set of financials. (See Vodafone Reports H1.)

The mobile giant unveiled a mobile advertising partnership with Yahoo Inc. (Nasdaq: YHOO), responded to M&A speculation, and promised more network sharing arrangements with competitors.

First, a quick look at the numbers. Revenues of £15.6 billion (US$29.6 billion) in the carrier's fiscal first half (to September 30) were pretty much in line with analysts' expectations, but its EBITDA (earnings before interest, tax, depreciation, and amortization) of £6.24 billion ($11.8 billion) were better than expected.

And other metrics, such as a net increase in Vodafone's customer base of 7.2 million in the second quarter, to take the global base to 191.6 million, were also slightly better than anticipated.

However, the company was forced to revalue some of its assets, and Vodafone suffered impairment charges of £8.1 billion ($15.4 million), mainly attributable to its operations in Germany and Italy. That left the operator with a loss before taxes of £3.3 billion ($6.3 billion).

Goodwill writedowns have featured prominently in Vodafone's reporting this year, and have contributed to what has been a difficult 2006 for CEO Arun Sarin. (See Vodafone Rings Warning Bell, Vodafone Upheaval Continues, Sarin Survives, and Ericsson Wins Japan 3G Deal.)

Overall, though, investors were happy with the company's performance, and Vodafone's share price edged up by a penny to 137 pence on the London Stock Exchange , nearly 25 percent better than the 110 pence the stock commanded in August.

Some of those gains have been driven by recent announcements about cost-saving actions. (See IBM, EDS Share Vodafone Spoils and V'fone Consolidates Data Centers.)

Yahoo alliance
Apart from its financials, Vodafone's main news today is its "strategic alliance" with Yahoo Inc. (Nasdaq: YHOO) that will result in the availability of advertising-subsidized services in the U.K. next year. (See Vodafone, Yahoo! Team Up.)

Yahoo will be the carrier's exclusive mobile advertising partner in the U.K., with the online giant's sales and technology teams helping to find advertisers and then deliver their messages to Vodafone UK customers in "a variety of mobile advertising formats." Those customers accepting the advertising will get free or discounted Vodafone services, though the carrier isn't providing any further details at present.

Sarin told analysts on today's financial conference call that feedback from a number of trials shows that customers are willing to have advertising delivered to them as long as it's on an opt-in basis, the benefits in terms of discounts or bonuses are clearly defined and easy to understand, and the adverts are interesting.

The CEO, who said the service will launch some time in the first quarter of the next financial year (April to June 2007), described Yahoo as "the best company in online display advertising," a turn of phrase that could be interpreted by some as a swipe at Google (Nasdaq: GOOG), which is desperate to take its advertising model into the mobile world. (See Google's Mobile Challenge.)

Sensing this perception, Sarin reminded his audience that Vodafone already has a relationship with Google to add search functionality to its Vodafone Live! consumer service, noting that this capability will be launched in Europe between January and March 2007. (See Vodafone, Google Team .)

He also namechecked his company's engagement with Microsoft Corp. (Nasdaq: MSFT). "We are playing with all the market leaders," he noted diplomatically. (See V'fone, Microsoft Collaborate.)

The CEO added that work continues on developing greater interaction between PCs and mobiles, and said there will be "more to come on this during the next few months."

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materialgirl 12/5/2012 | 3:34:51 AM
re: Vodafone Talks M&A, Mobile Adverts I have no ad-related phone experience other than my land line during dinner hour. However, I do not understand how anyone struggling to dial a number while driving, or even walking around, would have time or patience to sit through an ad. Half the time, during daylight, on my MOT phone, I cannot even see the screen.

The only mobile ads that make sense to me are location-related and query-related, like show me maps to all the Italian restaurants within a 10-minute walk.
digits 12/5/2012 | 3:34:51 AM
re: Vodafone Talks M&A, Mobile Adverts Anyone out there have experience of advert-subsidized mobile or fixed services? It has been tried in Scandinavia with fixed line voice, if I remember correctly, but bombed because the adverts were too intrusive.

Maybe Voodoo can get the balance right. The biggest challenge, in my opinion, is for the overpaid 'creatives' in the 'meeja' industry to make any adverts in the least bit 'interesting'...
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