Vodafone cites positive impact of Project Spring as it reports organic service revenue growth in H1

10 Nov 2015

British mobile giant Vodafone Group has published its financial results for the six months ended 30 September 2015, with the company saying that its financial performance was ‘beginning to reflect the positive impact of our Project Spring investment programme and better commercial execution’.

In the six-month period under review revenues declined by 2.3% year-on-year to GBP20.266 billion (USD31.2 billion), while group service revenues fell by 3.7% against the corresponding period of the previous fiscal year to GBP18.430 billion. Notably though Vodafone Group highlighted organic service revenue growth of 1.0% in the first half of its 2016 financial year, comprising growth of 0.8% in 1Q15/16 and 1.2% in the following quarter. Meanwhile, excluding the impact of mobile termination rate (MTR) cuts, the company said that first half service revenue rose 1.6%, attributing this to ‘continued strong growth in the Africa, Middle East and Asia Pacific (AMAP) region and further evidence of stabilisation in Europe’.

EBITDA increased in H1 2015/16 to GBP5.786 billion in organic terms (down 1.7% y-o-y on a reported basis), with Vodafone Group saying the group EBITDA margin had improved by 0.2 percentage points to 28.6% (reported), and while again it was down organically – by 0.3% – the company said both Europe and AMAP showed ‘organic margin improvement, supported by a better top line trend and good cost control’. Adjusted operating profit for the first six months of the company’s current financial year declined by 5.9% (in organic terms) as the increase in depreciation and amortisation charges resulting from the Project Spring investment more than offset the organic growth in EBITDA.

With regards to the progress of Project Spring, Vodafone said it continued to make very good progress on all elements of its investment plans, with highlights including: 4G population coverage reaching 80% in Europe, up from 32% two years ago; 66 million homes in Europe now being able to subscribe for Vodafone-branded high speed broadband services, of which 42% are on the company’s own fibre or cable networks; and M2M services now being available in 27 countries. In operational terms, meanwhile, Vodafone Group reported a total mobile subscriber base of 454.205 million as at end-September 2015, up from 449.193 million three months earlier, while fixed broadband accesses numbered 12.543 million at that date, compared to 12.313 million at end-March 2015.

Commenting on the company’s performance, Vittorio Colao, Vodafone Group chief executive, said: ‘We have reached an important turning point for the Group with a return to organic growth in service revenue and EBITDA in the first half of the financial year … We are achieving 4G leadership in Europe, organic revenue growth in fixed and enterprise and sustained commercial momentum in emerging markets, all of which is consistent with our long term strategy and which is being accelerated through our Project Spring investments. We also remain keenly focused on increasing efficiency and improving margins. We expect progress to continue in the second half of the year.’

United Kingdom, Vodafone Group