Vodafone chief hails European sales growth
Vodafone has reported second-quarter sales growth that beat analysts' estimates as the carrier's continental European operations performed better than expected, outweighing a €5bn writedown of its Indian unit.
Organic service revenue - what Vodafone earns from customers' monthly phone bills and usage on its network - rose 2.4pc in the period ended September 30, the UK-based carrier said yesterday. Analysts had predicted growth of 1.9pc on average.
"We are the fastest-growing broadband network in Europe," ceo Vittorio Colao said, highlighting modest improvements in Europe led by its German and Italian subsidiaries.
While continental Europe performed well, Vodafone faces rising challenges at home, as well as India, a market the carrier is counting on to fuel customer gains. Competition there remains fierce after rival BT Group acquired mobile carrier EE.
In India, the company said an extended offer from new entrant Jio had triggered discounts from other operators, lowering cash flows and throwing Vodafone's planning assumptions into doubt.
Overall, Vodafone's first-half loss was €5bn, versus a loss of €2.3bn a year earlier. The impairment charge in India, while large, is unsurprising given the intensification of competition, analysts at Goldman Sachs said in a note. Vodafone fell 0.7pc to 203.10 pence in London. The stock is down 8.1pc this year.
Service revenue rose by 5.4 percent in India in the second quarter, slower than the 6.4pc growth of the preceding three months, Vodafone said. An initial public offering of the India unit, previously expected during the fiscal year that ends in March, won't take place before then, the company said in a statement.
The carrier intends to proceed with the India IPO "as soon as market conditions improve," chief financial officer Nick Read said. The company recently invested 477 billion rupees (€6.5bn) in the operation to strengthen its voice and data offers and prepare the unit for a spectrum auction.
Vodafone lowered the top end of its forecast range for full-year growth in organic earnings before interest, taxes, depreciation and amortisation and now expects the equivalent of €15.7bn to €16.1bn, compared with €15.7bn to €16.2bn.
Colao said ambitious roll out of high-speed fixed and mobile internet in Germany - which he called "our largest and our best investment case" - would be hard to replicate in the UK due to the high cost of connecting customers to the national network run by BT. (Bloomberg)