Vodafone's Data Drive
The trends aren't that shocking: Mature markets, especially those in Western Europe, are stagnating as intense competition and reduced customer spending take their toll, though Verizon Wireless delivered better returns; immature markets such as India are experiencing major revenue growth as customer numbers continue to rise; and data services are growing in popularity and delivering increasingly significant income.
Regional ups and downs
Customer addition numbers during the past year show the difference between the mature and emerging markets.
In Europe (10 markets, including Germany, Spain, Italy, and the U.K.), Vodafone grew its total customer base by only 3.4 million subscribers in the year to March 31, 2009, to reach the 114 million mark. In Italy and Ireland, Vodafone registered a decline in overall customers, albeit only slightly.
While full-year revenues in Europe increased by 13.6 percent to £29.6 billion ($45.8 billion), that was boosted significantly by favorable currency exchange rate fluctuations, without which Vodafone's European revenues would have dipped by 2.1 percent for the fiscal year.
By contrast, the company's Asia/Pacific and Middle East operations (six markets, including India and Egypt) added more than 30 million new subscribers to take the regional total to 94.5 million.
Vodafone India , India's third-largest mobile operator, added 24.6 million to its customer base to end the fiscal year with 68.8 million subscribers. (See A Guide to India's Telecom Market.)
Revenues from the Asia/Pacific and Middle East region increased by 32.3 percent to £5.8 billion ($9 billion), of which nearly £2.7 billion ($4.2 billion) was generated by India. Even without the impact of currency exchange fluctuations, revenues were up 9.3 percent from a year earlier.
Verizon Wireless, which saw its customer base grow by nearly 20 million to 86.6 million in the year to the end of March, generated more than £3.5 million ($5.4 billion) in revenues for Vodafone, an increase of nearly 45 percent from a year earlier. Vodafone holds a 45 percent stake in the U.S. mobile operator.
Data, messaging, and fixed broadband growth
Revenues from data services (not including messaging) grew nearly 44 percent to £3 billion ($4.64 billion), of which £2.5 billion ($3.86 billion) was generated in Europe.
The carrier says it will continue to push 3G dongles and business handsets, and cited its involvement in the Joint Innovation Lab (JIL) and its efforts to open up its back-office systems to third-party developers as key elements of its strategy to boost data service uptake further. (See Vodafone Puts Its Apps in Gear and Mobile Giants Team Up.)
The operator has also been rolling out its mobile advertising platform during the past year or so, and now offers mobile advertising services in 18 markets. It has run more than 2,000 advertising campaigns in the past year, and has been developing a number of different formats and delivery mechanisms, including profile- and location-based services, enhanced mobile browser displays, branded applications, and an online self-service platform that enables local advertisers to set up and run their own campaigns (in development in Germany and Czech Republic).
Revenues from messaging services also increased, by 12.8 percent to nearly £4.5 billion ($7 billion), while fixed-line revenues, including sales of DSL-based broadband connections, ramped 45.5 percent to more than £2.7 billion ($4.2 billion). Vodafone ended March with 4.6 million broadband customers, an increase of 1 million during the fiscal year. (See Vodafone Splashes Out on Acquisitions.)
Vodafone spent £5.9 billion ($9.1 billion) on capital expenditure during the fiscal year, including £1.4 billion ($2.16 billion) in India. It expects its group capex budget to be roughly the same in the current year as it continues to invest in fixed broadband and higher mobile data access speeds across the board and continue its network rollout in India.
Those headline numbers...
Those trends, though, don't show up in the global annual financial numbers.
Vodafone's overall full-year revenues grew 15.6 percent to £41 billion ($63.4 billion), though that growth was due to favorable changes in the exchange rate, especially between the British pound and the euro. That factor also helped the company's adjusted operating profit (before impairment charges) increase by nearly 17 percent to nearly £11.8 billion ($18.2 billion).
But if the exchange rates had remained constant during the past year, overall group revenues would have decreased very slightly, while sales from Europe, where Vodafone has 114 million of its total 264 million customers, would have decreased by more than 2 percent, a statistic that reveals the tough trading conditions in the region at the moment.
In addition, Vodafone reviewed the value of its global assets, leading to non-cash impairment charges of £5.9 billion ($9.1 billion), the bulk of which came from a writedown of its Spanish and Turkish operations. That hit left the mobile giant with an operating profit of £5.86 billion ($9.06 billion), down nearly 42 percent from a year earlier. As a result, net income fell by more than 54 percent to nearly £3.1 billion ($4.8 billion).
To combat the overall squeeze on profitability and the impact of the global economic downturn, the carrier said it will accelerate its previously announced £1 billion ($1.55 billion) cost-cutting plan, and now aims to account for 65 percent of this (instead of 50 percent) in the current financial year ending March 31, 2010. (See Vodafone to Slash Costs and Vodafone Adjusts to Hard Times .)
Vodafone's share price dipped only slightly, by 0.8 percent, to 126.4 pence on the London Stock Exchange.
— Ray Le Maistre, International News Editor, Light Reading