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U.K.-based telco giant reports organic revenue improvement for first time since 2008 as Project Spring starts to pay off.
Vodafone reported declines in full-year revenue and EBITDA on Tuesday due to foreign exchange losses; however, on an underlying basis the picture was much rosier.
The U.K.-based telco generated revenue of £40.97 billion (€52.38 billion) in the 12 months to 31 March, down from £42.23 billion last year, but up 2.3% organically. Similarly EBITDA came in at £11.61 billion, down from £11.92 billion in fiscal 2015, but up 2.7% organically.
"This has been a year of strong execution for the group, returning to organic growth in both revenue and EBITDA for the first time since 2008," said Vodafone CEO Vittorio Colao, in a statement.
Colao attributed the recovery to improvements in Vodafone’s infrastructure, spearheaded by its Project Spring investment programme.
The company has extended 4G coverage in Europe to 87% of its network footprint, just below its 90% target due to rollout delays in the U.K. and Germany. 3G population coverage in Vodafone’s AMAP markets, excluding India, has reached 85%. In India, urban 3G coverage is up to 95%.
"Spring was not just an investment in coverage and quality, it was also an investment in capability," Colao said during a results presentation.
Indeed, Vodafone has been investing heavily to build up its fixed-line assets via capital expenditure and acquisitions, particularly in Europe, strengthening not just its consumer proposition, but also its credentials in the enterprise and carrier services markets.
Vodafone now offers fixed services to 72 million premises in Europe, reaching 30 million of them with its own fibre infrastructure.
"We are the fastest-growing fixed broadband provider in Europe," Colao claimed.
Vodafone ended March with 12.34 million fixed broadband customers in Europe, compared to 11.28 million a year earlier.
And as for Vodafone enterprise, that division accounted for 27.7% of group service revenue, which reached £37.16 billion in the 12 months to 31 March, up 1.5% year-on-year on an organic basis.
On the mobile side, Vodafone’s group customer base increased to 462.28 million from 445.84 million a year earlier, as steady AMAP growth offset a slight decline in Europe. Its 4G customer base reached 46.8 million.
In terms of Vodafone’s fiscal fourth quarter performance, underlying revenue increased 1.1% year-on-year to £10.42 billion. Europe returned to organic growth, with revenue edging up 0.1% to £6.87 billion, and service revenue increasing 0.5% to £6.32 billion.
"The stand-out metric was a first quarter of positive service revenue growth in Europe since December 2010. This offered further evidence of the European sector’s emergence from a prolonged period of brutal price competition and weak economic growth," said Kester Mann, principal analyst, operators, at CCS Insight, in a research note.
"Vodafone will be encouraged by an upbeat set of results that again illustrated recovery in Europe and impressive growth in emerging markets," he said.
For the coming financial year, Vodafone expects organic EBITDA growth of 3%-6%. Total capex is expected be in the mid-teens as a percentage of annual revenue.
"This is higher than the 13%-14% range that we previously anticipated, as we believe that there are attractive investment opportunities available to further accelerate our growth and improve our long-term strategic positioning," Vodafone said.
