VODAFONE GROUP PLC news
release
Trading update for the quarter ended 31 December 20154 February 2016
Group organic service revenue up 1.4%* (Q2: 1.2%*); sixth consecutive quarter of improvement
Continued recovery in Europe (-0.6%*); sustained momentum in AMAP (6.5%*)
Strong commercial progress: Europe mobile contract net adds +506,000; broadband customers +311,000
Project Spring: 92% through mo ile build; 4G coverage now 84% in Europe; AMAP build targets achieved
Continued data growth: usage +68%; 34.8 million 4G customers, +4.7 million in the quarter
European fixed service revenue +3.7%*; marketing high speed broadband to 69m households, 29m on-net
Enterprise service revenue +2.6%1; continued growth in VGE and M2M
Full year guidance confirmed
e
Quarter end d
Change
1
31 December 20 5 Reported
Organic*
Europe2
Africa, Middle East and Asia Pacific ('AMAP')2
£m
10,283 9,169 6,038 2,926%
(5.5) (6.3) (7.1) (3.6)%
2.6 1.4 (0.6) 6.5"We have taken another step forward in the last three months, with the highlights being a strong performance in South Africa and improving trends in Germany and Italy. With 7 million new customers in the quarter, we have m intained our good commercial momentum in mobile and are beginning to accelerate in fixed, as we launch converged services in more markets. Customers are increasingly recognising the quality of our networks, leading to strong growth in data usage and benefiting from the significant investments in 4G and fibre that we have made over the last two years. We
continue to face regulatory and competitive challenges in many markets, but positioned for the growth opportunities ahead."
e are confident that the business is well
Notes:
* All amounts in this document marked with an "*" represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and movements in foreign exchange rates.
Organic growth adjusted for inter-quarter timing difference.
The Group has amended its reporting to reflect changes in the internal management of its Enterprise business. T he primary change has been that on 1 April 2015, the Group redefined its segments to report international voice transit service revenue within common functions rather than within the service revenue amounts disclosed for each country and region. The service revenue amounts presented for the quarter ended 31 December 2014 have been restated onto a comparable basis together with all disclosed organic service revenue growth rates. There is no impact on total Group service revenues.
Vodafone Group Plc
Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England vodafone.com
Telephone: +44 7919 990230
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Registered Office: Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England. Registered in England No. 1833679
Group performanceGroup total revenue was £10.3 billion and Group service revenue was £9.2 billion. Total revenue declined 5.5%, including a 0.2 percentage point negative impact from M&A, and a 7.9 percentage point negative impact from foreign exchange rate movements. On an organic basis Group service revenue increased 1.4%* (Q2: 1.2%*) and, excluding the impact of mobile termination rate ('MTR') cuts, Group service revenue grew 2.1%* (Q2: 1.8%*).
EuropeTotal revenue declined 6.0%, including a 0.1 percentage point favourable impact from M&A and a 6.7 percentage point adverse impact from foreign exchange movements.
In Europe, service revenue has continued to recover, declining 0.6%* (Q2: -1.0%*), supported by a continued improvement in our commercial performance and a more stable pricing environment in many markets. Excluding the impact of MTR cuts, service revenue declined by 0.3%* (Q2: -0.8%*).
Trends in mobile continue to improve with Q3 mobile service revenue declining 2.0%* (Q2: -2.3%*) driven by the continued growth in our contract customer base and a year-on-year reduction in contract churn. Supporting these trends has been the customer appetite for 4G and strong demand for data. We now have 28.1 million 4G customers across Europe, 3.8 million of which were added during the quarter, and total data usage grew 60% year-on-year.
Fixed service revenue grew 3.7%* (Q2: 3.1%*), driven by strong consumer broadband customer growth, particularly in high speed fibre and cable services which grew by 379,000 to 5.9 million in the quarter.
Revenue
Quarter ended
2015 | 2014 | Reported | Organic* |
£m | £m | % | % |
31 December Change Restated1
Germany | 1,776 | 1,948 | (8.8) | (0.4) |
Italy | 932 | 1,022 | (8.8) | (0.3) |
UK | 1,442 | 1,464 | (1.5) | (0.7) |
Spain | 805 | 910 | (11.5) | (3.1) |
Other Europe | 1,108 | 1,170 | (5.3) | 1.6 |
Eliminations | (25) | (15) | ||
Service revenue1 | 6,038 | 6,499 | (7.1) | (0.6) |
Revenue | 6,716 | 7,146 | (6.0) | 0.6 |
Germany
Service revenue declined 0.4%* (Q2 -1.8%*) with the trend in both mobile and fixed improving quarter-on-quarter.
Mobile service revenue declined 1.7%* (Q2: -2.8%*), reflecting improving trends in consumer mobile. Consumer contract ARPU declined 3.9%, with stabilising trends quarter-on-quarter, and we maintained our strong commercial momentum adding 196,000 contract customers in Q3. This was supported by an increase in Vodafone branded sales through direct channels. In enterprise, we continued to experience increased price competition, resulting in lower ARPU and slower customer base growth. We have made further strong progress on network quality, with 4G network coverage now at 84% and our dropped call rate falling 26% year-on-year. In November, the independent "Connect" test confirmed that we have the 'best voice network in Germany' and a strong second and most improved data position, with the gap to the third placed operator in the market growing. We now have 6.9 million 4G customers.
Fixed service revenue grew 1.7%* (Q2: flat*), driven by continued strong growth in cable and improving trends in DSL. In total we grew our broadband customer base by 105,000 (Q2: 66,000), supported by a return to growth in DSL following successful sales campaigns. Our fully integrated fixed, mobile and TV service, Vodafone Red One, has also had encouraging take-up following its launch in November. The integration of KDG continued as planned, and we remain on-track to implement measures by the end of this financial year that will deliver 75% of the targeted cost and capex synergy run rate by the end of next financial year.
Italy
Service revenue declined 0.3%* (Q2: -2.0%*), with this improving trend reflecting a return to growth in mobile, partially offset by a decline in fixed and enterprise.
Mobile service revenue grew 0.1%* (Q2: -3.0%*), driven by further growth in consumer prepaid ARPU following the successful upgrade of customers to Vodafone Exclusive, a monthly subscription providing customers with a range of unique benefits. Data usage also continued to grow strongly at 56% year-on-year. These factors more than offset some customer base decline, reflecting a moderate increase in promotional activity across the prepaid market. Our market leading 4G population coverage is now 94%, and latest independent mobile tests conducted by P3 show we have a leading and clearly differentiated network position in both voice and data. We continued to grow the number of 4G subscribers strongly and now have 5.0 million customers.
Fixed service revenue declined 2.5%* (Q2: +3.5%*), with continued broadband customer additions of 38,000 more than offset by ARPU pressure from increased price competition. We have built our own fibre network to 14,000 cabinets, enabling us to directly offer high speed broadband services to 3.0 million households.
UK
UK service revenue declined 0.7%* (Q2: -0.5%*), reflecting improved trends in fixed offset by a reduction in mobile revenue.
Mobile service revenue declined 1.0%* (Q2: -0.5%*), driven by ongoing reductions in consumer out-of-bundle revenue, the impact of 08XX regulation, and the expected decline in MVNO customers. Revenue trends in both consumer and enterprise were stable quarter-on-quarter, reflecting good contract customer growth of 94,000 in Q3 (Q2: 90,000). This was supported by a strong Vodafone-branded retail store performance, with customer additions up 8% year-on-year. Our 4G network coverage is 86% (based on the OFCOM definition) and we continued to achieve good growth in the 4G base, with 6.3 million customers by the end of the quarter (Q2: 5.3 million). In recent mobile network tests conducted by P3 Vodafone was ranked first in London for combined voice and data, and second for both voice and data nationwide.
Fixed service revenue grew by 0.2%* (Q2: -0.4%*), supported by an improved performance in enterprise. Our consumer broadband service which was launched in October has grown steadily.
Spain
Service revenue declined 3.1%* (Q2: -2.0%*), reflecting a slowdown in mobile revenue and continued positive momentum in fixed. Excluding the negative impact of handset financing, total service revenue grew 0.7%* (Q2:
+1.0%*).
Mobile service revenue fell 9.2%* (Q2: -6.8%*). This reduction was mainly in out-of-bundle data revenue following the introduction in September of a cap in our main out-of-bundle data proposition to reduce bill shock. The impact of handset financing was also an incremental drag quarter-on-quarter. Our 4G population coverage reached 86% by the end of Q3, covering over 2,100 municipalities, and we now have 4.8 million 4G customers. Our network was recognised as 'best in test' in the latest independent mobile tests conducted by P3, reflecting the significant investment made, and we have commenced the rollout of 800 MHz spectrum across our sites to further strengthen our 4G position.
Fixed service revenue grew 12.7%* (Q2: 10.7%*), supported by an acceleration in broadband customer additions to 79,000 (Q2: +28,000). We continued to achieve good customer growth in our fully integrated cable, mobile and TV service, Vodafone One, with over 1.1 million customers now taking this service. We also grew our TV customer base to over 1.0 million, supported by our strong TV platform and attractive content packages. The integration of Ono is proceeding strongly and we remain on-track to deliver 100% of the targeted cost and capex synergy run rate by the end of this financial year. Including our joint fibre network build with Orange, we can now reach 8.2 million households with our high speed broadband services.
Other Europe
Service revenue grew 1.6%* (Q2: 1.5%*), with growth in all markets apart from Greece.
In the Netherlands, service revenue grew 0.2%* (Q2: 1.1%*), with growth in consumer fixed and enterprise offset by a fall in consumer mobile, following increased competitive pressure. Portugal returned to service revenue growth in the quarter (Q3: 0.6%*, Q2: -0.2%*) with fixed revenue continuing to grow strongly, partly offset by a decline in mobile following an MTR cut. We also announced an extension to our fibre-to-the-home ('FTTH') build plans to cover an additional 0.5 million homes, taking us to 2.75 million homes in total by the end of 2016. In Ireland, service revenue grew 3.4%* (Q2: 2.0%*), with strong momentum in fixed and a return to growth in mobile driven by improving trends in both consumer and enterprise. In Greece, there was a further slowdown in service revenue trends (Q3: -1.3%*, Q2: -0.3%*) as a result of the macroeconomic environment, which has increased pressure on consumer contract ARPU in particular. The integration of Hellas Online remains on track.
AMAPTotal revenue declined 3.5%, including a 10.9 percentage point adverse impact from foreign exchange movements.
Service revenue in AMAP increased 6.5%* (Q2: 6.7%*), sustaining its strong track record of organic service revenue growth. The main drivers behind this performance are customer growth, with 6.3 million customers added in the quarter, and strong demand for mobile voice and data services. Across the region voice and data usage increased 8% and 78% respectively, and the number of data users increased by 17% year-on-year to 128.7 million.
Revenue
Quarter ended
2015 | 2014 | Reported | Organic* |
£m | £m | % | % |
31 December Change Restated1
India | 1,103 | 1,098 | 0.5 | 2.3 |
Vodacom | 799 | 891 | (10.3) | 7.2 |
Other AMAP | 1,027 | 1,047 | (1.9) | 10.8 |
Eliminations | (3) | - | ||
Service revenue1 | 2,926 | 3,036 | (3.6) | 6.5 |
Revenue | 3,314 | 3,435 | (3.5) | 7.5 |
India
Service revenue increased 2.3%* (Q2: 5.6%*), with the quarterly growth rate slowing due to further competitive pressure, impacting both voice and data prices and data customer growth. Excluding the impact of regulatory changes, including MTR cuts, roaming price caps and an increase in service tax, service revenue grew by 7.6%* (Q2: 10.9%*).
We continued to grow our total customer base, driven by a particularly strong performance in voice, adding 5.4 million customers (Q2: 2.8 million) in the quarter. While total voice traffic continues to grow, this was more than offset by a further decline in voice revenue per minute, which fell 9.8% year-on-year as a result of ongoing price competition.
Data growth remained strong, with data usage increasing 64%, supported by an increasing proportion of 3G users, now totalling 25.9 million. However, the rate of revenue growth slowed in the quarter driven by increased price competition. This resulted in lower unitary prices, down 16% year-on-year, driven by increased bundle adoption which led to a reduction in data revenue growth.
Progress on Project Spring remains strong having already achieved our original site build out plans. We added 7,600 3G sites in the quarter, taking our population coverage in targeted urban areas to 94%. We have also launched 4G services in two key circles and remain on track to expand this to five circles by the end of this financial year, covering around 45% of current data revenue. Our M-Pesa service continues to expand, with 962,000 active customers and 102,000 agents.
Vodacom
Service revenue grew 7.2%* (Q2: 3.9%*), with accelerating quarterly trends in both South Africa and our international businesses outside of South Africa.
In South Africa, service revenue grew 7.2%* (Q2: 3.0%*). This improved quarterly performance was driven by good customer growth 8.3% (Q2: 5.3%), stabilising voice trends and strong data growth, despite an MTR cut. Voice trends improved supported by our targeted bundled offers and the substantial progress made on our pricing transformation programme. Data revenue grew 27.3%*, and now represents 35% of total local service revenue (+5ppt year-on-year). This was underpinned by the significant growth in our 4G customer base which now totals 2.5 million, with 4G network coverage at 54%. In total we now have 19.1 million active data users, an increase of 1.3 million quarter-on-quarter. In enterprise, we maintained our strong commercial momentum with a 5.4% increase in mobile customers and good growth in fixed.
Service revenue growth in Vodacom's operations outside of South Africa was 10.7%* (Q2: 8.3%*), driven by customer base growth, strong data take-up and M-Pesa. Active data customers reached 11.2 million, up 15.2%, and M-Pesa customers totalled 6.6 million.
Vodafone Group plc issued this content on 04 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 04 February 2016 08:20:00 UTC
