July 19, 2007 / 6:15 AM / 13 years ago

Vodafone posts solid revenue and growth

LONDON (Reuters) - Booming business in India and Turkey helped Vodafone Group (VOD.L) offset weaker European markets on Thursday as the mobile phone giant set out its stall before a shareholder meeting on July 24.

Mobile phone giant Vodafone Group posted robust first-quarter revenue and customer growth on Thursday as booming business in India and Turkey helped offset tough German and Italian markets. REUTERS/files

Vodafone, the world’s second-largest mobile phone company by customers behind China Mobile (0941.HK), added 9.1 million subscribers in its first quarter to end-June, topping most expectations and taking its customer base to about 232 million.

Group revenues climbed 7.5 percent to 8.3 billion pounds. Excluding acquisitions, organic revenue grew 4 percent as weakness in markets such as Germany and Italy cast a pall over a stronger performance in Spain and Britain.

Along with new assets in India and Turkey, where revenues surges by 50 percent and 32 percent respectively, Vodafone’s U.S. telecoms asset Verizon Wireless also put in another strong performance, adding 1.6 million new customers.

Vodafone’s Chief Executive Arun Sarin, who on Tuesday will face fresh shareholder pressure over the 45-percent Verizon stake, which is seen as a passive investment, said he continuously examined how to maximise value in the United States.

“We have the view that the Vodafone management have been doing a reasonable job on behalf of shareholders,” said Richard Marwood, a fund manager at Axa Investments, which owns 1.1 percent of Vodafone and is overweight in the stock.

“If you were designing the perfect structure to hold that (U.S) asset, you wouldn’t start from here. But there are various impediments along the way, with tax being one of the big ones ... We certainly believe that they are working on a solution for this,” Marwood noted.

Vodafone’s shares rose two percent in early trade and stood 0.5 percent firmer at 159.9 pence by 11:10 a.m., in line with the broader market.


Vodafone has come under renewed pressure from a small, activist shareholder, Efficient Capital Structures (ECS), to either spin off its stake in Verizon Wireless or create a tracker stock. Vodafone said it was not just waiting for the U.S. business to reinstate a dividend around 2009.

“Frankly, there are other things we might be able to do along the way that maximise the value for our shareholders. And that is what we’re staying alert to,” Sarin told a conference call.

Sarin, who came under pressure from a small but high-profile group of investors last year to sell the asset, noted that the value of stake had risen by $10 billion (4.9 billion pounds) to $15 billion in the last year, according to analysts.

ECS, which owns just 0.0004 percent of Vodafone stock and is backed by John Mayo, the former finance director of telecoms equipment group Marconi, is also calling on the company to pile debt on Vodafone’s “under-utilised” balance sheet by issuing 34 billion pounds of new bonds.


Compounded by Vodafone’s move to slash once-lucrative prices for using mobile phones abroad, revenues in Germany dropped 6.3 percent, also hit by growth in low-spending pre-pay customers.

In Italy, where the so-called Bersani decree prohibits operators from charging top-up fees on pre-paid phone deals, revenues fell 3.1 percent — better than some expectations.

Spain topped forecasts as revenues jumped 12.5 percent and the UK put in a relatively strong performance, with revenues up almost 5 percent despite tough competition.

Vodafone reiterated full-year revenue forecasts of 33.3 billion pounds to 34.1 billion and adjusted operating profit of between 9.3 billion pounds and 9.8 billion.

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