UK operator giant Vodafone was keen to highlight its steady progress when announcing its latest quarterly and full year earnings, focusing on organic growth, investment and untapped market potential.
Companies tend to focus on the most flattering metric they can find when commenting on their results and Vodafone is no exception. The chosen metric was year-on-year organic (excluding exceptional events such as M&A) service revenue growth, which just about scraped into positive territory of +0.1%. The reason this is a big deal is that it’s been ten quarters since Vodafone could last make such a claim.
“It has been a year of continued progress, culminating with a return to organic growth in Q4,” said Vodafone Chief Exec Vittorio Colao. “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.
“Our Project Spring investment programme is on plan, delivering a significantly improved experience to customers. In Europe, 4G coverage now extends to over 70% of our footprint, and voice quality and reliability have improved noticeably. We now reach 28 million homes with our own, next generation cable and fibre networks. In India, our 3G footprint now reaches 90% of target areas, with 3G data revenue up 125% year-on-year in Q4.
“We have significant opportunities ahead of us, with only 13% of our European mobile customers using 4G, and our market share in fixed services only a fraction of our share in mobile. In addition, businesses around the world are increasingly looking to put mobility at the centre of their own strategies. With the assets and skills we have today, further enhanced by the completion of Project Spring, we will be strongly positioned to provide ever improving services to customers and seize these opportunities.”
Scratching beneath the surface reveals full year organic service revenue declined by 1.6% and adjusted operating profit was down 24%. In common with many of its competitors the main underlying message Vodafone is trying to convey is of a shift in momentum and the potential commencement of a prolonged return to growth.
For the time being, however, this growth seems to be coming outside of Europe, with Africa, Middle East and APAC (AMAP) reporting organic revenue growth of 5.8%, while Europe, which accounts for around two thirds of group revenue registered a decline of 4.7%. As you can see in the full year tables below, India is currently Vodafone’s fastest growing country.
