Friday, 25 November 2011

Vodafone H1 profit up 15%

Telecommunications company Vodafone Group PLC reported a 15 per cent increase in first-half net profit. Results were boosted by favourable currency movements, lower taxes and expansion at its Verizon Wireless venture in the US.
For the six months ending Sept 30, Vodafone made a net profit of USD 7.6 billion, up from a year ago.
Group revenue from continuing operations, however, was down 3 per cent, the company said, while reported revenue -which accounts for businesses it has bought or sold - rose 9 per cent to 21.8 billion pounds.
The company did not break out results for the second quarter.
Vodafone shares were down 2.9 per cent at 134 pence in midmorning trading on the London Stock Exchange.
"Whilst the results have broadly met analysts' expectations, a continued dependency on cost cutting measures fails to truly inspire," said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers.

Sunday, 20 November 2011

Vodafone hit by downturn

Vodafone has cut its revenue outlook, knocking confidence in the telecoms sector and dragging down shares in European rival Telefonica and supplier Ericsson.

The world's biggest mobile group by sales was hit by consumers delaying buying new phones, sending its shares to a 20-month low and wiping about 10 billion pounds (NZ$26.68 billion) off its market value.

Ericsson reported better-than-expected results but these were overshadowed by Vodafone's warning of a tough economic outlook and the news reverberated throughout the sector, hitting Spain's Telefonica and others.

"We are beginning to see an impact from the current economic environment which is greater than we expected," outgoing Vodafone Chief Executive Arun Sarin told investors and analysts on a conference call.

Collins Stewart analyst Mark James said telecoms companies had shown remarkable resilience to date to the macro-economic slowdown, but Vodafone had kicked off the telecoms results season with a reminder that nobody was immune.

Dutch KPN, Norway's Telenor, Nordic operator TeliaSonera and Belgium's Mobistar and Belgacom are all due to report quarterly results later this week.

"This shatters the widespread perception that Vodafone will be defensive in a weakening economy," Investec analyst Jonathan Groocock said.

"The Spanish and UK telecoms markets, resilient to the economic slowdown to date, finally look to have cracked."

The biggest single cause of Vodafone's woes was an unexpectedly sharp fall in the Spanish market, where large numbers of immigrant construction workers who had been Vodafone customers left the country as the housing market slowed.

Vodafone said it said seen smaller but similar effects in other countries and said it was hard to tell how much it had been hurt by the economy and how much by competition. "Clearly, both factors are there," said CEO-designate Vittorio Colao.

Vodafone shares fell 14.4 per cent to 127.9 pence by 1051 GMT, pulling the European telecoms index shares down 7.8 per cent. Telefonica shares fell 7.5 per cent, Deutsche Telekom 6.4 per cent and France Telecom 4.4 per cent.

Credit markets reacted with widening spreads.

Telecom equipment maker Ericsson reported better-than-expected second-quarter earnings and reiterated it expected a flat mobile infrastructure market this year, but its shares could not escape Vodafone's pull and fell 8.3 per cent.

"The hard-tested Ericsson share is falling significantly today. . . not due to the results themselves, but that Ericsson's customer, Vodafone, is out with a significant forecast downgrade," Jyske Bank said in a note to clients.

Margins at the Swedish company's key business in telecoms networks faced continued pressure as new rollouts, rather than more lucrative upgrades to existing networks, made up a surprisingly large share of its business in emerging markets.

Ericsson had singled out the high share of new networks in its sales mix as the main reason for a collapse in third-quarter earnings last year, which led to a run on its shares.

Vodafone left its capital expenditure plans unchanged for now, but indicated it had no urgent need to expand network capacity in response to higher demand for third-generation services such as video or internet browsing.

"For the time being, we are well within our capacity limits," Colao said on the conference call.

Michael Kovacocy, European telecoms analyst at Daiwa SMBC, argued the Vodafone results showed European mobile markets were saturated and revenue growth ever harder to come by.

"We think the real story here is just competitive pressures and saturated markets," he said.

Wednesday, 16 November 2011

Vodafone CEO Sarin to step down

LONDON, England (CNN) -- Vodafone Group PLC Tuesday posted a $13.2 billion net profit for fiscal 2008 compared with a loss a year earlier and announced that Chief Executive Arun Sarin will step down and be replaced by his deputy Vittorio Colao.
Sarin had been in charge at Vodafone since 2003.

Sarin, who has run the world's largest mobile phone operator by sales for the past five years, will retire after the company's annual general meeting July 29.

Sarin, 53, joined Vodafone's board in 1999 and became chief executive in July 2003. He went through a rocky patch two years ago, when nearly 10% of Vodafone shareholders voted against his re-election as chief executive.

But the company has since outperformed City profit forecasts and enjoyed big revenue growth in fast-growing markets such as India and Turkey.

The England-based mobile phone operator said net profit for the 12 months to end-March was $13.1billion, compared with a net loss of $9.7 billion a year earlier. Adjusted net profit, which excludes impairment losses, non-operating income from associate companies, and some currency effects, rose 6.7% to $13.1 billion, in line with analysts' estimates.

Annual sales rose 14.1% to $70 billion, driven by increased data sales, growth in emerging markets and positive currency exchange rates, in particular the strong rupee and euro against the British pound.

Vodafone derives 60% of sales from countries where the euro is the main currency and has an extensive Indian operation in Vodafone Essar.The sales figure slightly exceeded analysts' consensus of $69.4 billion and was above company guidance for full-year revenue of $68 billion to $69.2 billion.

The results, combined with news of Vodafone's CEO succession, will likely push its shares higher at the open, according to spread betting company Cantor. It thinks Colao was groomed to replace Sarin and the timing is right. The stock closed at 321 cents Friday, giving the company a market capitalization of about $171.2billion.

"The guidance for 2009 is likely to push up people's forecasts," said John Davis, analyst at Dresdner Kleinwort. He added that Sarin's departure was unlikely to greatly affect the company's share price.

"It was well trailed and its not like either Sarin or Colao are massively disliked by the market," Davis said.

In its outlook, the company said that it expects fiscal 2009 revenue to rise to between $78.5 billion and $80.3 billion, and operating profit for 2009 between $21.7 billion and $22.6 billion.

"The group continues to drive revenue growth, particularly in respect of its communications strategy for data and fixed broadband services and in emerging markets," Vodafone said in a statement.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 10% to $26 billion in fiscal 2008, compared with $23.6 billion a year earlier.

Vodafone increased its total dividend per share by 11.1% to 7.51 pence, another factor likely to be welcomed by markets according to Cantor