Vodafone Hits Data Milestone

Vodafone Group plc (NYSE: VOD) said today that revenue from mobile data services reached the £4 billion (US$5.8 billion) mark for the first time in the 2010 fiscal year, underlining the increasing importance of broadband services for operators that are facing saturated mobile markets.

CEO Vittorio Colao said mobile data, fixed broadband, and operations in emerging markets all helped drive growth in the financial year that ended on March 31.

While overall group revenue increased by 8.4 percent (it declined 2.3 percent after excluding benefits from foreign exchange rates and acquisitions) to £44.5 billion ($64.3 billion), group data revenue increased by 19.3 percent to £4 billion ($5.8 billion) from a total of 50 million active data users across the group.

Fixed-line revenue increased by 7.9 percent to £3.3 billion ($4.8 billion); the fixed broadband customer base is now 5.6 million, of which 5.4 million are in Europe.

"We have continued to push beyond European voice," observed Colao, speaking at the company's fourth-quarter and full-year results presentation. He noted that 58 percent of group revenues now come from data and emerging markets, with the remainder generated by more traditional voice services in Europe.

In Europe, data accounted for 26 percent of revenues, and data penetration stood at 34 percent of the group's active customer base. Colao said the goal is to increase this penetration level to more than 50 percent in the 2013 fiscal year. Based on the group's active customer base, smartphone penetration was 11 percent at the end of the last fiscal year; the goal is to increase this to more than 35 percent in 2013.

Indeed, smartphone use is currently the key driver of data growth, and Vodafone said it plans to increase the proportion of smartphones from 30 percent of its total sales mix to 70 percent by the end of fiscal 2013.

Colao said traffic on the group's networks in Europe increased 100 percent during the last 12 months, of which 85 percent was from data cards and 15 percent from smartphones. But the mix is shifting to smartphones: In the fourth quarter last year, total data revenues in Europe increased by 19 percent, with mobile Internet traffic increasing by 37 percent and PC (dongles) traffic by 17 percent.

"I am particularly pleased with the increase in mobile Internet," said chief financial officer Andy Halford during the presentation.

A further benefit of increased data usage on smartphones as opposed to dongles is that smartphones tend to put less strain on operator networks: Average smartphone data traffic is 100 to 200 MBytes a month, said Colao, while dongle usage is more like 1.5 to 1.6 GBytes a month.

Vodafone is expecting to play catchup with iPhone sales this year, as exclusivity deals have now come to an end in most markets. Michel Combes, CEO of Vodafone's European region, said Vodafone will start selling the iPhone in Spain and Germany in the coming months.

Colao said he is pleased to see a much wider choice of attractive handsets on the market than there was just two years ago. He added that there are now half a million users of Vodafone 360, which is Vodafone's own interface for mobile Internet services and applications. (See Vodafone Live! Is Dead!)

Vodafone sells two 360 devices, the Samsung H1 and M1 phones, and 360 services are now preloaded on four Nokia handsets. It is also possible for Vodafone users to download 360 services onto a wider selection of Nokia handsets.

Some other key figures from today's results:

The group was forced to pay an impairment charge of £2.3 billion ($3.3 billion) on its Indian operations because of higher spectrum costs and fierce competition. In spite of this, the group was still able to double overall net profits to £8.7 billion ($12.5 billion) in the full year and said it achieved £1 billion ($1.4 billion) in cost savings 12 months ahead of schedule. A new two-year £1 billion cost-saving program announced last November is now being executed.

Total mobile subscriber numbers stood at 341 million by the end of last year, with net additions of 8.5 million in the fourth quarter. Capex is expected to remain at around £6.2 billion ($8.9 billion). Enterprise revenue declined by 4.1 percent to around £8.3 billion ($12 billion) last year, but Vodafone Global Enterprise, which focuses on large multinational companies, was able to achieve a 2.3 percent increase in revenue to £1.1 billion ($1.6 billion) and now has 550 MNC customers.

— Anne Morris, freelance editor, special to Light Reading

Be the first to post a comment regarding this story.
Sign In