Vodafone expects growth at ‘lower end’ of range

Vodafone expects growth at ‘lower end’ of range

Vodafone Group today issued its trading update for the quarter ended 31 December 2016, reporting a 1.7% increase in overall organic service revenue for its third quarter - but with UK service revenues falling 3.2%, and in India down 1.9%.

 

The company put the results down to intensifying competition in both regions. It has already announced plans to puts its Indian business in order, but says it now expects its underlying earnings to come in at the lower end of a range for growth of 3% to 6%.

 

Vittorio Colao, Group Chief Executive, commented: ‘Our overall performance in Europe and Africa remained strong during the third quarter, reflecting good execution… Mobile contract ARPU continued to stabilise… In the UK we have made good progress in improving customer service but face heightened price competition in Enterprise.’

 

He added ‘We anticipate intense competitive pressure in India in the fourth quarter and are taking a series of commercial actions, including the extension of 4G services to 17 leading circles.’

 

‘We continue to achieve strong customer growth across our footprint and remain Europe’s fastest growing broadband company. We now have 14.3 million broadband customers, with 417,000 new broadband customers added in the quarter.’

 

Positive notes included continuing 4G adoption driving data growth, with 4G customers up 7.6 million to 64.6 million and data volumes up 53%; and Enterprise performance continuing with growth of 3.3%, driven by fixed market share gains and AMAP (Africa, Middle-East, Asia and Pacific) mobile.

 

Earlier this week Vodafone revealed that it is discussing merging its Indian subsidiary with local rival Idea Cellular to better compete with new entrant Reliance Jio.

 

Vodafone confirmed its full-year guidance for free cashflow of at least €4bn, but said it now expected its underlying earnings (EBITDA) to come in at the lower end of a range for growth of 3% to 6%.

 

Colao concluded: 'We are reconfirming our guidance for the year and are confident that we will sustain our commercial momentum.'

 

A share analyst commented ‘We remain cautious about VOD’s prospects, at the current share price level’.

 

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