Vodafone revenues fall but profits strengthen in first half

Vodafone reported a 4.1% fall in group total revenue to €23.1bn in its first half on Tuesday, which it said was primarily due to the deconsolidation of Vodafone Netherlands and foreign exchange movements.

The FTSE 100 mobile and broadband operator said its operating profit for the six months to 30 September was up 32.5% to €2.0bn, with profit for the financial period of €1.2bn.

Organic service revenue was ahead 1.7%, and 1.3% in the second quarter, with organic service revenue in Europe rising 0.8%, and 6.2% in its Asia-Middle East-Asia Pacific (AMAP) markets.

The company reported that organic adjusted EBITDA was up 13.0% to €7.4bn, or 9.3% when excluding roaming, UK handset financing and regulatory settlements.

Free cash flow pre-spectrum improved to €1.3bn, compared to the €0.1bn outflow in the prior year, while free cash flow was €0.4bn, swinging from a €0.4bn outflow in the prior year.

Vodafone’s board raised its full-year guidance for organic adjusted EBITDA growth to around 10%, from a previous 4% to 8%, implying a range of €14.75bn to €14.95bn at guidance foreign exchange rates.

It added that free cash flow pre-spectrum was set to exceed €5bn, from the previously-guided 'around €5 billion'.

The company noted that Vodafone India service revenues were down 15.8%, with adjusted EBITDA off 39.2%, although the merger with Idea Cellular was “progressing well”.

Its board declared an interim dividend per share of 4.84 euro cents - a rise of 2.1%.

“In the first half of the year we have maintained good commercial momentum,” said group chief executive Vittorio Colao.

“Revenue grew organically in the majority of our markets driven by mobile data and our continued success as Europe's fastest growing broadband provider.

“Enterprise revenues continue to grow, led by our internet of things, cloud and fixed services, and for the second year running we achieved an absolute reduction in our operating costs.”

As a result, Colao said the company was able to report a “strong” financial performance, with substantial EBITDA margin expansion and profit growth, and was raising its financial outlook for the year.

“In India competition remains intense,” he added.

“There are however signs of positive developments in the Indian market, with consolidation of smaller operators and recent price increases from the new entrant.

“We are making good progress in securing regulatory approvals for our merger with Idea Cellular and in monetising our tower assets.”

In the second half of the year, Colao said Vodafone would continue to implement its strategic initiatives, including fibre infrastructure expansion in Germany, Portugal and the UK; its entry into the consumer IoT market with the launch of ‘V by Vodafone’; and the 'Digital Vodafone' programme designed to enhance the customer experience, increasing revenues and cost efficiency.