Vodafone Group's organic revenue declines in FY14/15

19 May 2015

UK telecoms giant Vodafone Group saw a 10.1% year-on-year increase in group revenue in reported terms for the year ended 31 March 2015, though on an organic basis it confirmed that total turnover was actually down by 0.8%, at GBP42.227 billion (USD69.6 billion). Similarly, group service revenue for the fiscal year in review stood at GBP38.497 billion, a figure which represented an annual increase of 9.4% in reported terms, but a 1.6% organic decline, or 0.8% if excluding the impact of regulated mobile termination rate (MTR) cuts. Notably though, Vodafone highlighted that it had returned to organic service revenue growth in the final quarter of the financial year, a development which it said reflected ‘a steady recovery in Europe and continued good growth in Africa, Middle East and Asia Pacific (AMAP)’.

EBITDA in FY14/15 totalled GBP11.915 billion, with organic EBITDA down 6.9%, mainly affected by lower revenues in Europe, while the group EBITDA margin fell 0.7 percentage points to 28.2%. Adjusted operating profit meanwhile declined by 18.6% to GBP3.5 billion as the increase in reported EBITDA was offset by the higher depreciation and amortisation resulting from the acquisitions of cablecos KDG in Germany and Ono in Spain.

Looking ahead, Vodafone has said it expects to report organic EBITDA growth for the financial year ending 31 March 2016, with EBITDA forecast to be in the range of GBP11.5 billion to GBP12.0 billion, while free cash flow is expected to be positive, after all capital expenditures, before merger and acquisition, spectrum and restructuring costs. CAPEX itself is expected to be between GBP8.5 billion and GBP9.0 billion, with such investment ‘reflecting the second year of Project Spring investment’.

In operational terms, Vodafone was keen to highlight the fact that it now has a total of 20.2 million 4G customers across all its operational units, with the group also noting that these subscribers are, on average, using twice the data of those signed up to its 3G services. Total mobile accesses meanwhile stood at 445.836 million as at end-March 2015, up from 430.834 million a year earlier, with group-wide fixed broadband connections totalling 12.049 million, up from 9.240 million.

Commenting on the results, Vodafone Group CEO Vittorio Colao was cited as saying: ‘It has been a year of continued progress, culminating with a return to organic growth in Q4. We have seen increasing signs of stabilisation in many of our European markets, supported by improvements in our commercial execution and very strong demand for data. In fixed line, revenue trends are improving supported by accelerating customer growth, and our recent cable acquisitions provide a strong platform for further growth. In emerging markets, our good growth trend has continued, driven by rising data penetration and leading network quality and distribution.’

United Kingdom, Vodafone Group