18th May 11
Vodafone announces £9.5bn profit
by Harry Oldfield
Smart profits: demand for internet phones have upped Vodafone revenue
Smart profits: demand for internet phones have upped Vodafone revenue
An increase in demand for smartphones as well as better-than-expected UK growth helped boost the annual profits of Vodafone to £9.5bn.
The Newbury-based company also experienced positive results from emerging markets like India and South Africa as profits increased nine per cent in the year leading up to 31 March.
However, the firm expects a lower outcome in 2012 as a result of tough trading in Italy and Spain as well as the absence of SFR, its French associate, which it sold last month. Guidance for profits in 2012 at an underlying level has been cut to range between £11bn and £11.8bn.
That figure is below the present operating figure, which increased 3.1 per cent to £11.8bn, at the upper end of the company’s forecasts allowing for the outlay for the Wireless iPhone launch of its US partner Verizon. That helped increase US revenues and along with strong performances in the Middle East, Asia Pacific and Africa revenues increased overall by 3.2 per cent to £45.9bn.
Data revenues rose by more than 25 per cent to £5.1bn, accounting for 12 per cent of group service revenues as smartphone use rapidly increased. Vodafone expects tablets, like the iPad, to provide the market with an additional boost and eventually to become mass market devices.
UK revenues, in particular, strongly increased as a result of this trend and were helped also by consumers changing from “all-you-can-eat” packages to pricing plans which reflect data usage. However, the end of the charges for call termination, to be gradually phased in from next year, is likely to have a negative impact on revenues growth in the UK next year.
There was also a strong growth in data in southern Europe, which was outstripped by falling costs in tradition mobile phone revenues. And revenues in Italy and Spain fell by six per cent and 10.6 per cent respectively.
Vodafone took impairment charges exceeding £6.15bn in 2010 for its business in Italy, Spain, Ireland, Portugal and Greece. Vittorio Coloa, the chief executive, added that the company was holding market share within all of its markets, as well as gaining ground in some of them.
The strength of its important emerging markets of South Africa and India made up for southern Europe’s weakness. Mr Coloa said that as data becomes increasingly important, he predicts the company’s superior network will end up being more important than cost.
He went on to describe continuing network investment as an important differentiator for the company, improving the experience of the customer and providing them with leadership in smartphone penetration as well as take up of customer data plans.
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