Vodafone dials in improved revenue, adjusted earnings

Mobile-focussed telco Vodafone Group posted its results for the year to 31 March on Tuesday, with group total revenue down 4.4% to €47.6bn, while full year organic service revenue grew 1.9%.

The FTSE 100 firm said fourth quarter organic service revenue grew 1.5%, with Europe stable at 0.1% - or 1.4% excluding regulation - and Africa, Middle East and Asia Pacific (AMAP) robust at 6.8%.

Organic adjusted EBITDA was up 5.8% to €14.1bn, with second half adjusted EBITDA up 6.3%.

Adjusted EBITDA, including India on a guidance basis - which was otherwise excluded from the results after Vodafone’s merger with Idea Cellular there in March - was up 3.4% to €15.8bn, which was within the company’s 3%-6% guidance range.

Free cash flow was €4.1bn, as capital additions declined 27.3% to a more normalised level post ‘Project Spring’ of €7.7bn, while free cash flow was €4.3bn on a guidance basis.

Vodafone’s loss for the financial year totalled €6.1bn, which included a net of tax impairment for India of €3.7bn.

The board declared a final dividend per share of 10.03 euro cents, up 2.0%, giving total dividends per share of 14.77 cents.

Its 2018 financial guidance included organic adjusted EBITDA growth of 4%-8%, or €14.0-€14.5b, and free cash flow of around €5bn.

“Our focus on excellence in customer experience has enabled further improvements in our overall commercial and financial performance during the year,” said group choef executive Vittorio Colao.

“Sustained investment in network quality has provided the platform to offer more generous plans to our mobile customers in Europe, stabilising contract ARPU, and has allowed us to capture strong data growth in our emerging markets operations.

“We continue to be Europe's fastest growing broadband provider, seizing the opportunities created by convergence and winning revenue market share, supported also by our Enterprise business which continues to outperform its peers.”

Colao said that translated into organic revenue growth, which - combined with a reduction in Vodafone’s cost base - expanded its adjusted EBITDA margin, accelerated its adjusted EBITDA growth to 6% and improved the company’s cash generation.

“Additionally, the proposed merger of Vodafone India and Idea Cellular will create a new champion for Digital India, while capturing synergies with an estimated net present value of $10bn.

“We expect to sustain our momentum in the coming financial year, generating free cash flow of around €5.0bn.

“Our confidence in the outlook is demonstrated by another 2% increase in our dividend.”