Vodafone FY2009/10 revenue up on forex gains

18 May 2010

British telecoms giant Vodafone Group has unveiled its full-year financial results for the twelve-month period ended 31 March 2010, posting revenue growth bolstered by favourable exchange rates and merger and acquisition activity. The group generated a turnover of GBP44.47 billion (USD64.13 billion), an 8.4% year-on-year increase, with exchange rates contributing 5.7 percentage points of growth, although organic revenue fell by 2.3% when excluding the impact of forex gains and M&A activity, with European service revenue falling 3.5% against the same period a year earlier. Reported earnings before interest, tax, depreciation and amortisation (EBITDA) meanwhile rose by 1.7% to GBP14.735 billion, although excluding positive effects from foreign exchange movement organic EBITDA was 7.4% down against FY2008/09. Vodafone also announced that, despite having added around 72 million subscribers at its Indian subsidiary, Vodafone Essar, since entering the market in 2007, recent hyper-competition and increased spectrum costs had led to a GBP2.3 billion impairment charge at the unit. On a more positive note the group did note that it had completed its GBP1 billion cost savings programme a year ahead of schedule, adding that it would now begin a new two-year programme, once again aimed at cutting GBP1 billion in costs.

Looking forward the group said that it expects to return to ‘low levels of organic revenue growth’ in 2010/11, although noted that this would be dependent on the economic environment across Europe. Vodafone forecast free cash flow of between GBP6 billion and GBP7 billion for the three years to 2013, while it said adjusted operating profit would be between GBP11.2 billion and GBP12 billion in the year to March 2011.

In terms of subscribers, at end-March 2010 Vodafone had a proportionate wireless customer base of 341.45 million, up 84.1% y-o-y, with Vodafone Essar accounting for just under 30% of the total, having surpassed the 100 million milestone in the first three months of 2010.

Commenting on the results, Vittorio Colao, Vodafone CEO, noted: ‘Vodafone’s financial results exceeded our upgraded guidance on all measures. Revenue trends have improved again in [fiscal] Q4 driven by growth in mobile data and fixed broadband. Cost reduction targets were delivered ahead of schedule enabling commercial reinvestment to improve market share and further strengthen our technology platforms … We are creating a stronger Vodafone, which is positioned to return to revenue growth during the 2011 financial year, as economic recovery should benefit our key markets.’

United Kingdom, Vodafone Group, Vodafone India