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U.K.-based telco group boosted by mobile data growth, lower costs
Vodafone on Tuesday raised its full year guidance after reporting solid growth in its fiscal first half earnings.
The U.K.-based telco group expects organic adjusted EBITDA to grow around 10% year-on-year to approximately €14.75 billion-€14.95 billion. That compares to an earlier forecast of 4%-8% growth, and a range of €14 billion-€14.5 billion. Vodafone also raised its free cash flow guidance to more than €5 billion from approximately €5 billion.
In a statement, Vodafone CEO Vittorio Colao said his company "maintained good commercial momentum" in the first half of the year.
"Revenue grew organically in the majority of our markets driven by mobile data," he said. "Enterprise revenues continue to grow, led by our Internet of Things (IoT), cloud and fixed services, and for the second year running we achieved an absolute reduction in our operating costs."
Vodafone’s revenue in the six months to 30 September fell 4.1% on last year to €23.1 billion, driven by forex movements and the deconsolidation of Vodafone Netherlands following its merger with Liberty Global’s Ziggo unit. Group organic service revenue grew 1.7% to €20.59 billion.
Adjusted EBITDA surged 13% to €7.39 billion. Vodafone swung to a net profit of €1.24 billion from a year earlier loss of €5 billion, which was caused by an impairment charge at its Indian operation.
"In India competition remains intense," Colao said. "There are however signs of positive developments in the Indian market, with consolidation of smaller operators and recent price increases from the new entrant (Reliance Jio Infocomm)."
Vodafone India is in the midst of negotiating regulatory clearance for its merger with Idea Cellular; on Monday, the two companies agreed to sell their standalone towers businesses to American Tower for a combined 78.5 billion rupees (€1.03 billion).
Looking ahead to the second half of the year, Colao said Vodafone will push on with its strategic initiatives, "including fibre infrastructure expansion in Germany, Portugal and the U.K."
The company will also ramp up its recently-announced push into the consumer IoT market with ‘V by Vodafone’, and continue with its ‘Digital Vodafone’ programme, which is designed to improve the customer experience, and increase revenue and cost efficiency, he said.
