Sunday 23 July 2017

Vodafone's operating profit slid 40pc for last year

Price competition, low consumer spending blamed for poor result

John Mulligan

John Mulligan

Operating profit at Vodafone Ireland, the country's largest mobile operator, fell almost 40pc to €122.3m in the 12 months to the end of last March as a continued decline in consumer spending and greater price competition combined to depress the figure.

The fall followed a 24pc drop in operating profit the previous year. Vodafone Ireland's operating profit last year was 63pc lower than it was in 2004.

Accounts seen by the Irish Independent for the company show that its revenue in the latest period declined nearly 10pc to €1.08bn -- a figure that is on par with the turnover figure for 2004.

Vodafone Ireland, which is headed by chief executive Jeroen Hoencamp, controls just over 40pc of the country's mobile market and has 2.38 million subscribers.

The accounts also show that the company paid an additional €125m dividend to its parent company during the last financial year, bringing to just over €2.2bn the amount that has been returned to the parent.

The latest payment was on top of a €400m dividend that was paid in the previous year. Sales costs rose 6pc to €480.7m, largely due to higher interconnection costs, while operating costs fell 15pc to €250.7m.

Mobile operators here have had their margins squeezed as they compete with each other for business.

The latest quarterly figures for Vodafone's Irish arm, for the three months to the end of last September, showed that its blended average monthly revenue per user -- which includes revenues from pre-pay and bill-pay customers -- fell almost 9pc to €35.40.

About half of Vodafone's bill-pay customer base now use smartphones. That compares with 11pc of the group-wide subscriber base that use them. Data revenue at Vodafone Ireland in the last reported quarter climbed 26pc. It releases its latest quarterly figures next week.

Streamlining

Vodafone employs around 1,300 people here and the accounts for the business also reveal that their combined wages declined by more than 20pc to €78.7m in the last financial year.

That was as a result of both pay cuts and bonuses being reduced. Directors' pay fell 10pc to €1.5m. Mr Hoencamp was appointed chief executive of Vodafone Ireland in July last year after his predecessor, Charles Butterworth, returned to Vodafone's UK operation.

Last October, three non-executive directors at Vodafone Ireland, including former Eircom chief executive Alfie Kane, stepped down from the board. Vodafone said the changes were a part of a streamlining of internal governance processes.

Irish Independent

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