Vodafone's Revenue Steadily Improves Amid Europe Recovery -- 2nd Update
February 04 2016 - 4:58AM
Dow Jones News
By Simon Zekaria
LONDON-- Vodafone Group PLC on Thursday lauded an ongoing
recovery in Europe, the U.K.-based telecommunications operator's
most important market, as it reported steadily improving third
fiscal quarter revenue growth.
The U.K.-based group said its revenue, excluding handset sales,
acquisitions and mergers, on a constant currency basis--its
preferred sales measure--rose 1.4% in the three months to
end-December. This was a turnaround from a 0.4% decline in the same
period a year ago, and up from 1.2% growth in the previous three
months. Vodafone's performance was in line with market
forecasts.
It is Vodafone's sixth consecutive quarter of improving revenue
by that metric.
In Europe, Vodafone posted revenue of GBP6.04 billion ($8.81
billion), down 0.6%on the same basis, but improved from a 2.7% fall
in the same period a year earlier and a 1% fall in the previous
three months.
In nominal terms, excluding handset sales, Vodafone's overall
revenue fell 6.3% to GBP9.17 billion, in line with forecasts.
"We have taken another step forward," said Chief Executive
Vittorio Colao. Vodafone cited improving top-line trends in Germany
and Italy as boosting trading, that countered Spain's worsening
performance and a slowdown in mobile sales.
In early dealing, Vodafone's shares ticked up 1.5% to 216
pence.
Analysts say telecoms firms in Europe are benefiting from demand
for faster-speed mobile Internet data and media-driven bundled
subscriptions, pricing and a recovery in consumer spending.
Vodafone also says the burden of regulation is easing in the
continent.
Write to Simon Zekaria at simon.zekaria@wsj.com
Central to Vodafone's revenue growth is building customer
loyalty by connecting products and services for retail bundling,
such as high-definition television and Internet broadband. These
multi-service packages keep down "churn," or the rate at which
customers leave services.
"We have maintained our good commercial momentum in mobile and
are beginning to accelerate in fixed [services]," said Mr.
Colao.
Vodafone is spending billions of dollars to improve its
world-wide fixed and mobile telecoms networks to raise consumer
sales from increased Internet browsing and move the business out of
a yearslong tough period, which dented its numbers. It is
particularly focused on building speed, capacity and coverage in
Europe, including with fiber-optic cable rollouts.
To cement its recovery in Europe, Vodafone is also seeking
partnerships.
Wednesday, Vodafone confirmed it is discussing a potential
venture with rival Liberty Global to jointly house their businesses
in the Netherlands. The move came four months after it shelved the
so-called asset swap talks with Liberty--media mogul John Malone's
U.S. cable giant, that is also focused on Europe.
The two companies, eager to shore up their businesses across
Europe's competitive telecoms and media markets, have also long
been connected with the possibility of a full-blown merger, but
neither company has commented on that scenario. RBC analysts say
industrial logic for a merger, producing $30 billion of synergies,
remains high.
On Thursday, Mr. Colao declined to comment further on any talks
with Liberty, but said the Vodafone remains "pragmatic" as it hones
the reach of its operations.
In emerging telecoms economies, Vodafone noted a "strong"
quarterly performance in South Africa.
Mr. Colao noted a disappointing performance in India, its major
developing market along with Turkey, but said Vodafone's intention
to a launch an initial public offering of its Indian business is on
track.
The company's improving fortunes overall have been reflected by
changes to its guidance. In November, the Newbury, England-based
firm said it now expects fiscal-year earnings before interest,
taxes, depreciation and amortization of between GBP11.7 billion and
GBP12 billion. Its previous guidance was for the lower end of the
range at GBP11.5 billion.
Thursday, it confirmed that improved forecast.
Write to Simon Zekaria at simon.zekaria@wsj.com
(END) Dow Jones Newswires
February 04, 2016 04:43 ET (09:43 GMT)
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