Global Economics

Vodafone Trims Losses, Sales Up 6%


The mobile operator focuses on emerging markets and shareholders, and cuts operating losses, to deliver solid results

Vodafone has slashed operating losses but European red tape and mobile phone market saturation is hampering progress, according to the mobile operator's 2007 financial results.

The Vodafone Group reported revenues of £31.1bn for the year ending 31 March 2007, with a reported growth of six per cent on last year's figures.

The company also narrowed its operating loss - from £14bn in 2006 to £1.6bn for 2007's financial year - and predicts its revenue will increase to up to £34.1bn for the 2008 financial year.

European revenues were a bit of a mixed bag for the mobile operator. UK revenues were up by 1.5 per cent to £5.1bn and Vodafone increased its revenues in Spain by more than 12 per cent to £4.5bn, compared with 2006's financial year results.

Revenues were down in Germany (5.4 per cent) and Italy (2.7 per cent) with total European revenues coming in at £24.2bn - a 0.7 per cent decrease from last year's figures.

In a statement, Vodafone CEO Arun Sarin said competitive and regulatory pressure is most intense in Europe but the mobile operator is trying to drive additional usages and revenue from core voice and messaging services in this region.

Sarin added: "We expect market conditions to remain challenging for the year ahead in Europe, notwithstanding continued positive operating trends in data revenue and voice usage."

Vodafone's customers spent 245 billion minutes chatting on mobile phones during 2007's financial year and its data revenue increased by 30 per cent to £1.4bn, compared with 2006's figures.

John Delaney, principal analyst at Ovum, said Vodafone has delivered a solid set of results but the mobile operator is still tackling the long-term problem of the heavy concentration of its business in the mature Western European markets.

Delaney added the results show a strong focus on Vodafone's "shareholder-first policy".

Vodafone announced its shareholders will have a final dividend of 4.41p per share, representing a 14 per cent increase over last year's final dividend. This represents a total payout of £3.6bn to Vodafone's shareholders for the financial year.

The mobile operator is also focusing on emerging markets and reported organic revenue growth in Egypt (41 per cent), Romania (28 per cent) and South Africa (22 per cent).

Following Vodafone's purchase of Indian network operator Hutchison Essar earlier this year, the mobile operator has a market penetration of around 14 per cent in India.

Sarin said India provides a very significant opportunity for Vodafone's future growth into emerging markets.

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