The Vodafone Group reported six month revenue of £19.1 billion, an increase of 2.5%. The increase was driven by the acquisition of CWW and TelstraClear in the prior year. Organic organic service revenue on a management basis declined 4.9%; Northern & Central Europe down 4.9%; Southern Europe was down 15.5%, and AMAP (Africa, Middled East and Asia Pacific) was up 5.7%. Profit for the period from continuing operations increased by £20.0 billion to £15.7 billion, primarily as a result of the recognition of additional deferred tax of £14.7 billion in the current period and an impairment charge of £5.9 billion in the prior period.
Regarding the sale of Vodafone’s state in Verizon Wireless, the company expects to realise a gain on disposal of between £45 billion and £50 billion, which will be recognised on completion. The exact figure will depend on a number of variables, primarily the sterling/US dollar exchange rate and the Verizon share price at the time of completion.
Vodafone also announced “Project Spring” to seize the attractive long-term opportunities and mitigate adverse factors in the telecommunications sector. The announcement, which builds on the “Vodafone 2015 Strategy announced in November 2012, boosts the company’s CAPEX spending by £7.0 billion through 2016 with the expectation that the European economies will begin to recover in the medium term.
In Europe, despite the current tough macroeconomic and regulatory environment, Vodafone believes the telecoms market is approaching a turning point:
- The demand for universal high speed data continues to grow, creating attractive growth opportunities in mobile and unified communications services in both the consumer and enterprise sectors;
- The economic environment is expected to recover, with a return to GDP growth forecast in 2013 and 2014 for Northern Europe and Southern Europe respectively; and
- The focus of regulation is showing some early signs of acknowledging the need to promote investment in the
- sector and permit consolidation.
Project Spring spending plans include an investment in Europe of around £3 billion to deliver deeper 3G coverage and capacity This will accelerate the 4G network build, supported by single RAN and high capacity backhaul. In AMAP, Vodafone will invest around £1.5 billion to extend 3G coverage across major cities and key regions to provide wider voice coverage and the best data experience.
Vodafone will invest approximately £1 billion in unified communications. In Europe, Vodafone will increase xDSL and fibre footprint to provide competitive unified communications solutions. In AMAP, Vodafone will establish a fibre footprint to enable converged services in key business areas.
Around £0.5 billion will be invested in the enterprise product suite. Vodafone will significantly expand our
geographic coverage for our core Enterprise business as well as M2M solutions and Vodafone One Net, whilst accelerating IP-VPN in nine major markets. Vodafone will increase its hosting capability and invest in traffic routing systems to build its carrier services business.
Vodafone is on target to deliver £0.3 billion reduction in European OPEX in FY 13/14 by:
- reducing its European network operation centres from 13 to 2
- expanding active network sharing in the UK, Spain, Greece and Romania
- currently 47% of European sites are shared today and 65% of new sites are shared.
- Increasing central procurement.
- > 10% targeted reduction in support costs in FY 13/14
Smartphone penetration in Europe is now 39% and 57% of mobile service revenue in Europe is in-bundle.
Data usage continues to grow with average usage per device now 400MB per month.
Vodafone will continue to invest in HSPA+, 4G and high capacity backhaul.
56% of Vodafone’s 3G footprint in Europe now operates at peak speeds of 43.2 Mbps, up from 29% one year ago.
Vodafone has now launched 4G services in 14 markets and unified communications capability in 12 markets.
