Vodafone nudges up guidance after returning to earnings growth
Vodafone reported a better-than-expected acceleration in revenue growth in the second quarter, helping it return to earnings growth for the first half and nudge its annual expectations towards the top of its guidance.
The world's second largest mobile operator posted second quarter organic service revenue growth of 1.2 percent, an improvement on the 0.8 percent it saw in the first quarter and ahead of the 0.9 percent analysts were expecting.
In the Irish market, mobile and fixed service revenue was up 2pc year-on-year to €240.7m during the quarter, boosted by growth in contract customers including migrations from Pay as you go to bill pay contracts as well as continued growth in Vodafone’s fixed business across both consumer and enterprise were all contributing factors.
Vodafone added 11,400 customers in the period maintaining its total base of 2.3 million customers.
“Our performance this quarter demonstrates improved momentum with increased service revenue and growth in customer numbers, particularly in our contract base," said Vodafone Ireland chief executive Anne O'Leary.
"We are also encouraged by strong growth in our enterprise division with significant customer wins during the period.
"This quarter we have further delivered on our ambition of being Ireland’s leading total communications provider with the roll-out of SIRO continuing apace, our on-going mobile network upgrade and fixed services investment.
"We can see that consumers are using more data especially when overseas or visiting Ireland due to increased value from worry-free data packages,” she added,
At group level, core earnings for the six months to end-September rose 1.9 percent to 5.79 billion pounds, beating expectations of 5.69 billion, as investment in its networks started to pay off.
"We have reached an important turning point for the group with a return to organic growth in service revenue and EBITDA (core earnings) in the first half of the financial year," Chief Executive Vittorio Colao said on Tuesday.
He said Europe was stabilizing, with seven out of 13 markets growing organic service revenue in the first half, and southern Europe in particular showing a strong rate of recovery.
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A steady improvement in the economic climate in Europe has coincided with Vodafone being able to offer 4G services to 80 percent of its customers after heavy investment in its networks over the last two years.
But markets remained competitive, Colao said, and European service revenue still fell in the second quarter, although the trend was improving.
Investors have refocused on Vodafone's performance in markets like Germany, Spain and Britain after talks between the company and cable operator Liberty Global about an exchange of assets were abandoned in September.
Vodafone's results on a reported level saw growth dampened by currency movements, and it said it would switch from reporting in sterling to euros for the 2017 financial year.