TIDMVOD
RNS Number : 9801B
Vodafone Group Plc
05 February 2020
Trading update for the quarter ended 31 December 2019
5 February 2020
Highlights
-- Continued organic service revenue growth in Q3, up 0.8%* (Q2: 0.7%*).
-- Similar performance in Europe (Q3: -1.4%*, Q2: -1.4%*), with ongoing recovery in Spain and
acceleration in the UK offset by a tougher prior year comparison in Italy. Retail revenues
grew in Germany, supported by strong cable broadband net adds.
-- Good growth in Rest of the World (Q3: 9.1%*, Q2: 8.9%*) as continued recovery in South Africa
was partially offset by lower growth in Turkey.
-- Good progress on strategic priorities during the quarter:
- Deepening customer engagement: Europe mobile contract churn declined year-on-year for a fifth
successive quarter, supporting 0.5(1) million mobile contract net additions. Over 0.4 million
NGN broadband net additions in Europe. First in Europe to make Amazon Web Services ultra-low
latency mobile edge computing available over our 5G networks.
- Radical simplification and digital transformation: 3.0 million Consumer customers on simplified
speed-tiered unlimited data plans. On track to achieve the EUR0.4 billion net opex reduction
target in Europe for FY20.
- Improving asset utilisation: Further progress on mobile network sharing. Detailed talks with
Deutsche Telekom in Germany to address 'grey spots', exclusive talks with NOS in Portugal.
- Towers monetisation: On track to operationalise our European TowerCo by May 2020 with senior
management now appointed. INWIT merger in Italy notified to the EC, decision due by end of
February.
- Portfolio management: MoU in relation to the sale of our 55% shareholding in Vodafone Egypt
for EUR2.2 billion, implying a September FY20 LTM multiple of 7.0x adjusted EBITDA. Agreement
to sell Vodafone Malta for EUR250 million.
-- Full year guidance reiterated: adjusted EBITDA of EUR14.8-15.0 billion, free cash flow (pre-spectrum)
of around EUR5.4 billion.
Quarter ended 31 December
------------------------------------------
Reported
2019 2018 growth
(restated)(2)
EURm EURm %
------------------------------------ ------ ----------------- ---------------
Group revenue 11,750 10,998 +6.8
Europe 8,970 8,148 +10.1
Rest of the World 2,479 2,548 (2.7)
------------------------------------- ------ ----------------- ---------------
2019 2018 Organic growth*
(re-presented)(3)
Alternative performance measures(4) EURm EURm %
-------------------------------------- ------ ----------------- ---------------
Group service revenue 9,733 9,153 0.8
Europe 7,586 6,953 (1.4)
Rest of the World 2,053 2,105 +9.1
------------------------------------- ------ ----------------- ---------------
Nick Read, Group Chief Executive, commented:
"I am pleased with the pace at which we have executed our
commercial and strategic priorities, which has allowed us to
maintain our momentum in the quarter. Competition in Europe remains
challenging, primarily in the value segment, however we continued
to improve customer loyalty and to grow in broadband, and we
achieved good growth in Africa. We expect a further gradual
improvement in service revenue growth in Q4, led by Europe.
We have recently announced the proposed sale of our stake in
Vodafone Egypt, which simplifies the Group into two scaled regional
platforms - Europe and sub-Saharan Africa - and reduces our net
debt. We have also appointed the senior management team for our
European TowerCo, and we are preparing for a potential IPO in early
2021."
OPERATING REVIEW
Strategic progress
During Q3 the Group made good progress on its key priorities for
the year ahead.
Deepening customer engagement: selling 'one more product',
lowering churn
We aim to deepen customer engagement in all of our customer
segments by selling additional products, particularly fixed and
convergent products in Europe and financial services in Africa,
contributing to revenue growth and a reduction in churn. We are
making good progress, with an encouraging 0.8(5) percentage point
year-on-year reduction in Europe mobile contract churn during Q3,
reaching 15.0%(5) . This is the fifth quarter in a row in which
Europe mobile contract churn has declined year-on-year.
We continue to see a significant opportunity to increase sales
of multi-product bundles, especially in fixed line where we have
Europe's largest NGN footprint and relatively low customer
penetration. Including VodafoneZiggo, we had 24.7 million fixed
broadband customers, 21.0 million NGN customers, 7.0 million
converged customers and 22.0 million TV customers in Europe at the
end of the period. Excluding VodafoneZiggo, we added 204,000
broadband customers, 417,000 NGN customers, 142,000 converged
customers and 47,000 TV customers during the quarter.
In mobile, we have now launched 5G in seven European markets.
Our new speed-tiered unlimited mobile data plans are available in
seven markets, meeting customer demands for 'worry-free' data usage
and creating opportunities for ARPU growth. We reached an unlimited
Consumer customer base of 3.0 million SIMs at the end of the
period. Reflecting the success of our unlimited plans, data volumes
on our mobile networks continued to grow strongly in Europe in Q3,
rising by 45%. Average smartphone usage for our overall customer
base increased to 4.5 GB/month (+1.2 GB year-on-year).
Digital first: a systematic transformation of our operating
model
We have a clear ambition to strengthen our differentiation and
to lead the industry in capturing the benefits of digital. We are
systematically transforming our customer-facing operations,
supported by leading automation, artificial intelligence and IT
capabilities, in order to fundamentally improve the customer
experience and to structurally reduce our cost base over a
multi-year period.
We are making good progress on reducing our operating costs, and
have now executed the actions required to meet our target to reduce
net operating expenses for Europe and Common Functions by EUR0.4
billion in the current financial year. We remain on track to meet
our target of a net operating expense reduction in Europe and
Common Functions of at least EUR1.2 billion by FY21 compared to
FY18 on an absolute organic basis. We will provide an updated
multi-year cost reduction plan at our full year results in May.
Improving asset utilisation
We aim to improve the utilisation of all of the Group's assets
as part of our focus on improving returns on capital.
We are progressing well on integrating the acquired Liberty
Global assets in Germany and CEE and are confident that we will
deliver the EUR535 million of targeted annual cost and capex
savings by the fifth full year post completion. We have launched
convergent offers in all four markets, and are encouraged by the
uptake. In Germany we have already delivered our internal DSL
migration targets for FY20, we will rebrand Unitymedia stores from
February and are preparing to harmonise our commercial propositions
in the spring.
We continue to make good progress on our plans to share mobile
networks in Europe. These agreements will help us to improve
network coverage, lower our environmental impact and reduce
operating costs, and support our co-leading network quality:
-- In November, we signed a letter of intent in Germany with Deutsche Telekom and Telefonica
Deutschland to co-ordinate the set-up and operation of up to 6,000 new sites in rural areas.
This cooperation will allow the mobile industry to largely eliminate 'white spots' - areas
with no mobile coverage by any operator - in sparsely populated regions and along traffic
routes, in an economically viable way.
-- Additionally, we are in detailed discussions with Deutsche Telekom about a reciprocal active
network sharing agreement for 'grey spots' - areas in which only one operator currently has
coverage.
-- In February, we announced a Letter of Intent with NOS in Portugal to explore a potential nationwide
partnership for mobile network sharing. We have started a period of exclusive negotiations
and expect the agreement to be concluded by the end of June.
In December, we were the first telecommunication operator in
Europe to announce an agreement with Amazon Web Services (AWS) to
support ultra-low latency mobile edge computing services by
deploying AWS Wavelength solutions at the edge of Vodafone's 5G
networks, as part of our multi-cloud strategy. Delivering a 5-10
times reduction in latency, the new services will help support
artificial intelligence, augmented and virtual reality, video
analytics, autonomous vehicles, robotics and drone control, and
will generate incremental revenues for the Group.
In January 2020 we restructured our agreement with CityFibre to
encourage a faster pace of build and a wider network reach, whilst
retaining exclusivity for the first 12 months on a rolling basis.
Following CityFibre's acquisition of FibreNation, we now have the
ability to extend these terms across CityFibre's intended build
footprint of 8 million UK homes. This builds on our agreement with
Openreach in the UK, which we announced in November, to offer
fibre-to-the-home service to 500,000 homes in three cities.
European towers
On 19 December, INWIT's shareholders approved the planned
combination of Vodafone Italy towers with INWIT. On 17 January
2020, we notified the EU Competition Commission about the
combination, and we continue to anticipate completion during the
first half of 2020.
We remain on track to legally separate our European tower
infrastructure into a new organisation, which will be operational
by May 2020, and we expect to incorporate it in Germany with its
headquarters in Düsseldorf. In November, we appointed Vivek
Badrinath as the CEO of our European TowerCo, and in February we
announced the appointment of Thomas Reisten as CFO, and Sonia
Hernandez as CCO.
We intend to monetise a substantial proportion of our European
tower infrastructure, depending on market conditions. We are
preparing for a potential IPO of our European TowerCo in early
calendar 2021 and are exploring potential monetisation of several
individual assets in parallel. We believe that there is significant
scope to generate operational efficiencies and increase tenancy
ratios across our tower portfolio, and that it will be possible to
monetise towers while preserving network differentiation and
long-term strategic flexibility.
Portfolio management
We continue to actively manage our portfolio in order to
strengthen our market positions, simplify the Group and reduce our
financial leverage.
On 29 January, we announced a Memorandum of Understanding with
Saudi Telecom Company ("stc") in relation to a potential sale of
Vodafone's 55% shareholding in Vodafone Egypt to stc for a cash
consideration of US$2,392 million (EUR2,171 million(6) ), implying
a September FY20 LTM multiple of 7.0x Adjusted EBITDA and 11.2x
Adjusted OpFCF. We intend to enter into a definitive agreement
following the completion of due diligence on Vodafone Egypt by stc.
The transaction is expected to close by the end of June 2020,
subject to regulatory approval.
On 19 December, we announced an agreement to sell Vodafone Malta
for a cash consideration equivalent to an Enterprise Value of
EUR250 million, implying FY19 multiples of 7.8x adjusted EBITDA and
13.1x OpFCF. The transaction is conditional on regulatory approval
from the Malta Communications Authority, with completion expected
in the first quarter of the calendar year.
We have extended the long stop date on our agreement to merge
Indus Towers and Bharti Infratel, which is still awaiting
regulatory approval from the Department of Telecommunications,
having received all other required approvals.
Outlook
At our H1 results in November we updated our financial guidance
for FY20 to reflect the acquisition of Liberty Global's assets in
Germany and CEE and the sale of Vodafone New Zealand. As both of
these transactions completed on 31 July, our guidance range
therefore includes the contribution from the Liberty Global assets
and excludes Vodafone New Zealand for the last eight months of
FY20.
Trading during the third quarter was in line with management's
expectations underlying the outlook statement for FY20 given at our
interim results in November. The Group therefore confirms its
expectation that adjusted EBITDA is expected to be in the range of
EUR14.8 - 15.0 billion(7) , implying around 2-3%* organic adjusted
EBITDA growth for the year. Free cash flow generation pre-spectrum
is expected to be around EUR5.4 billion, after all capex, before
M&A and restructuring costs, and based on guidance FX
rates.
Notes:
1. Excludes Italy, which is impacted by significant contract to prepaid
migrations.
2. As explained in the Group's Preliminary Announcement for the year-end
31 March 2019, revenue in prior quarters was revised for the allocation
of, and timing of recognition for, equipment and service revenue.
Consequently, revenue for the comparative period has been revised
compared to amounts previously disclosed in the trading update for
the three months ended 31 December 2018. Europe service revenue decreased
by EUR33 million and other service revenue decreased by EUR19 million,
resulting in a total decrease in Group service revenue of EUR52 million.
Other revenue increased by EUR54 million, resulting in a net increase
in revenue of EUR2 million.
3. Alternative performance measures for the comparative period were
previously disclosed on an IAS 18 basis in the trading update for
the three months ended 31 December 2018. The alternative performance
measures have been re-presented on an IFRS 15 basis.
4. Alternative performance measures are non-GAAP measures that are
presented to provide readers with additional financial information
that is regularly reviewed by management and should not be viewed
in isolation or as an alternative to the equivalent GAAP measure.
See "Alternative performance measures" on page 9 for more information
and reconciliations to the closest respective equivalent GAAP measure
and "Definition of terms" on page 13 for further details. All comparative
period alternative performance measures have been re-presented on
an IFRS 15 basis.
5. Excludes the impact of inactive data only SIM losses in Italy
during Q3.
6. On a cash and debt free basis, converted from US$ to EUR at a
rate of 0.9076 (as at 27 January 2020).
7. Based on guidance FX rates and IFRS 15 and IFRS 16 accounting
standards.
All amounts in this document marked with an "*" represent organic
growth which presents performance on a comparable basis, both in
terms of merger and acquisition activity (notably by excluding the
disposal of Vodafone New Zealand and the acquired European Liberty
Global assets) and movements in foreign exchange rates. Organic growth
is an alternative performance measure. See "Alternative performance
measures" on page 9 for further details and reconciliations to the
respective closest equivalent GAAP measure.
---------------------------------------------------------------------------
Group
Group revenue increased by EUR0.8 billion to EUR11.8 billion,
reflecting the contribution from the acquired Liberty Global
assets, partially offset by the disposal of Vodafone New Zealand
and foreign exchange headwinds of EUR0.1 billion.
Group organic service revenue increased by 0.8%* (Q2: 0.7%*).
Growth in the majority of markets was offset by continued declines
in Italy and Spain, reflecting elevated competition in these
markets.
Quarter ended 31 December
------------------------------------------
Growth
-------------------
2019 2018 Reported Organic *
(restated)(1)
EURm EURm % %
---------------------- ------ ------------- -------- ---------
Service revenue
Europe 7,586 6,953 +9.1 (1.4)
Rest of the World 2,053 2,105 (2.5) +9.1
Other 117 109
Eliminations (23) (14)
----------------------- ------ ------------- -------- ---------
Total service revenue 9,733 9,153 +6.3 +0.8
Other revenue 2,017 1,845
----------------------- ------ ------------- -------- ---------
Revenue 11,750 10,998 +6.8 +2.4
----------------------- ------ ------------- -------- ---------
Note:
1. See note 2 on page 4 for an explanation of the restatement.
Europe
Total revenue increased by 10.1% reflecting the contribution
from the acquired Liberty Global assets. Organic service revenue,
which excludes the acquired Liberty Global assets, declined 1.4%*
(Q2: -1.4%*) with growth in the UK and Other Europe being offset by
declines in Italy and Spain.
Quarter ended 31 December
2018
Service
Quarter ended 31 December revenue
2019 (re-presented)(1) growth
----------------------------- ----------------------------- --------
Service Other Service Other
revenue revenue Revenue revenue revenue Revenue Organic*
EURm EURm EURm EURm EURm EURm %
------- ------- --------- -------- -------- --------- -------- -------- --------
Germany 2,883 416 3,299 2,301 355 2,656 -
Italy 1,220 209 1,429 1,284 229 1,513 (5.0)
UK 1,282 443 1,725 1,235 309 1,544 +0.6
Spain 966 112 1,078 1,039 120 1,159 (6.5)
Other Europe 1,265 204 1,469 1,119 184 1,303 +3.0
Eliminations (30) - (30) (25) (2) (27)
---------------- --------- -------- -------- --------- -------- -------- --------
Total 7,586 1,384 8,970 6,953 1,195 8,148 (1.4)
---------------- --------- -------- -------- --------- -------- -------- --------
Note:
1. The comparative results were previously disclosed on an IAS
18 basis in the trading update for the 3 months ended 31 December
2018. These comparative results have been re-presented in the table
above on an IFRS 15 basis.
Germany
Service revenue excluding Unitymedia was flat* (Q2: -0.2%*) as
solid retail growth was offset by declining wholesale revenues.
Retail revenues grew by 1.0%* (Q2: 0.7%*), with continued customer
growth partially offset by the impact of international call rate
regulation.
Mobile service revenue fell by 2.2%* (Q2: -2.7%*) driven by
declines in wholesale and a drag from regulation. Retail revenues
excluding regulatory impacts grew 0.4%* (Q2: -0.1%*). We added
160,000 contract customers, supported in part by the success of our
GigaCube proposition as well as by our continued good commercial
momentum in branded channels. Contract churn reduced by 0.4
percentage points year-on-year to 13.0% in Q3, driven by improved
loyalty in our branded base.
Fixed service revenue increased by 2.8%* (Q2: 3.0%*) as good
retail growth was partially offset by wholesale declines and
accelerating DSL migrations to the Unitymedia cable footprint,
which dragged on our organic growth. Retail revenues grew 3.1%*
(Q2: 3.4%*). Our commercial momentum including Unitymedia
accelerated with 153,000 net cable customer additions in Q3,
supported by 52,000 migrations from DSL and successful seasonal
campaigns; overall, we added 93,000 broadband customers. We also
added 51,000 Consumer converged customers, supported by our
GigaKombi proposition, taking our total Consumer converged customer
base to 1.5 million. Our TV customer base declined by 73,000,
similar to the prior quarter.
Italy
Service revenue declined by 5.0%* (Q2: -3.2%*), with good growth
in fixed offset by declines in mobile. The sequential slowdown
primarily reflected the lapping of prior year price increases.
Mobile service revenue declined 7.7%* (Q2: -6.5%*). The decline
primarily reflected a lower active customer base following the
arrival of a new entrant in the prior year. Market mobile number
portability ('MNP') volumes were lower by 5% year-on-year,
reflecting fewer ports between main brands, and our customer
outflows following a price increase in the summer moderated during
the quarter. However, competition in the low-value segment of the
prepaid market remained intense, and our secondary brand ho.
continued to grow strongly, reaching 1.6 million active users at
the end of the quarter.
Fixed service revenue increased 4.2%* (Q2: 9.1%*) as continued
growth in our fixed broadband customer base was partially offset by
the lapping of a prior year price increase. We added 35,000
broadband customers in Q3. Our total converged Consumer customer
base is now 1.0 million (representing 35% of our broadband base),
an increase of 30,000 in the quarter. Through our owned NGN
footprint and strategic partnership with Open Fiber we now pass 7.3
million households.
UK
Service revenue increased by 0.6%* (Q2: flat*) with an improved
mobile service revenue performance partially offset by greater
wholesale declines. International call rate regulation dragged on
service revenue growth by 0.5 percentage points.
Mobile service revenue grew 0.6%* (Q2: -0.7%*) supported by a
higher customer base and despite an ongoing regulatory drag of 0.7
percentage points (Q2: 0.6 percentage points). Our commercial
momentum continued to accelerate, supported by our new range of
commercial plans including speed-tiered 'Vodafone Unlimited' mobile
data propositions and our 5G launch in July. We added 134,000
mobile contract customers in Q3 and had over 2 million customers on
the new plans at the end of the period. Contract churn reduced by
0.5 percentage points year-on-year to 14.8% supported by improved
Business churn and despite the impact of text-to-switch regulation.
We also added 116,000 prepaid customers, supported by our digital
sub-brand VOXI.
Fixed service revenue grew 0.5%* (Q2: 2.2%*) supported by
continued customer growth in Consumer broadband and higher Business
service revenue growth, partially offset by lower wholesale
revenues. We added 20,000 broadband customers, lower than in prior
quarters as competitive intensity increased.
Spain
Service revenues declined by 6.5%* (Q2: -8.0%*), reflecting a
shift in overall market demand towards the value segment and our
decision not to renew unprofitable football rights. The improvement
in quarterly trends reflected the stabilisation of our customer
base over the past two quarters.
Our commercial performance continued to recover in Q3, supported
in part by the good performance of our 'Lowi' second brand. We
added 19,000 mobile contract customers and returned to positive
broadband customer growth with 9,000 additions. Our total TV
subscriber base grew by 56,000, supported by our new TV and series
offers and despite our decision last year not to renew football
content rights. Q3 was the first quarter of mobile contract,
broadband and TV customer base growth since Q3 FY18.
Although the overall pricing environment remains highly
competitive, we continued to see good uptake of our new
speed-tiered unlimited plans with 1.8 million customers at the end
of Q3. On average, the ARPU of unlimited customers is higher post
migrating to the new plans.
Other Europe
Other Europe, which now represents 13.0% of Group service
revenue, grew 3.0%* (Q2: 3.3%*). All eight markets grew service
revenue in Q3.
In Portugal, service revenue grew by 5.9%* (Q2: 5.3%*),
supported by mobile contract customer base growth and fixed
customer and ARPU growth. In Ireland, service revenue grew 0.1%*
(Q2: 0.9%*), with the slowdown in quarterly trends reflecting
increased mobile competition. In Greece, service revenue grew by
1.9%* (Q2: 4.4%*) as growth in prepaid ARPU was partially offset by
increased fixed competition.
Rest of the World
Total revenue decreased by 2.7% with organic growth offset by
the disposal of Vodafone New Zealand, and a 1.0 percentage point
drag from foreign exchange movements, particularly with regard to
the Egyptian pound. Organic service revenue increased 9.1%*,
supported by customer base and data revenue growth.
Quarter ended 31 December
2018
Service
Quarter ended 31 December revenue
2019 (re-presented)(1) growth
----------------------------- ----------------------------- --------
Service Other Service Other
revenue revenue Revenue revenue revenue Revenue Organic*
EURm EURm EURm EURm EURm EURm %
-------- ------- --------- -------- -------- --------- -------- -------- --------
Vodacom 1,162 290 1,452 1,096 263 1,359 +5.2
Other Markets 891 136 1,027 1,009 180 1,189 +14.5
----------------- --------- -------- -------- --------- -------- -------- --------
Total 2,053 426 2,479 2,105 443 2,548 +9.1
----------------- --------- -------- -------- --------- -------- -------- --------
Note:
1. The comparative results were previously disclosed on an IAS
18 basis in the trading update for the 3 months ended 31 December
2018. These comparative results have been re-presented in the table
above on an IFRS 15 basis.
Vodacom
Vodacom Group service revenue grew 5.2%* (Q2: 3.6%*) with trends
in South Africa improving and continued strong growth in Vodacom's
International operations.
In South Africa, service revenue increased 4.6%* (Q2: 1.8%*).
Service revenue growth was similar to the prior quarter on an
underlying basis, as Q2 was impacted by a one-off benefit in the
prior year. This growth was achieved despite a weak macroeconomic
environment and our pro-active efforts to transform data pricing,
which included a 50% reduction in out-of-bundle rates in March 2019
as well as reductions in a number of data bundle prices throughout
the year. These efforts are contributing to significant elasticity
in usage, with data traffic growth accelerating to 65% year-on-year
as customers benefited from improved pricing. We added 140,000
prepaid customers and 35,000 contract customers in the period,
taking our total mobile customer base to 48.2 million.
Vodacom's International operations outside of South Africa grew
by 7.4%* (Q2: 9.7%*). Growth remained strong in DRC and Mozambique,
but slowed in Tanzania due to increased competition. In total we
added 1.7 million customers in Q3, up 8.8% year-on-year to 38.2
million, despite new customer registration requirements in
Tanzania.
From January 2020, we were required to bar services to 1.7
million unregistered customers in Tanzania, out of a total customer
base of 15.6 million, in line with a government biometric
registration deadline. As at 31 January 2020, an additional 5.0
million customer SIMs remained unregistered. We expect to recover
the majority of these customers over the coming quarters.
Other Markets - Turkey
Service revenues increased by 17.3%* (Q2: 19.8%*) supported by
growing mobile contract ARPU, increased mobile data revenue and
fixed line customer base growth. The sequential slowdown in growth
reflected the lapping of a prior-year price increase and lower
out-of-bundle data revenue.
Other Markets - Egypt
Egypt service revenue grew 13.9%* (Q2: 15.6%*), supported by
good customer base growth and increased data usage. The sequential
slowdown in growth reflected lower mobile incoming revenue due to
foreign exchange movements.
Vodafone Idea - JV
In October, the Supreme Court gave an adverse judgement in the
adjusted gross revenue ("AGR") case against the industry. The
outlook for Vodafone Idea Limited ("VIL") remains critical. VIL is
actively seeking various forms of relief from the Indian Government
to ensure that the rate and level of payments it makes to the
Indian Government is sustainable and it can meet its other
commitments as they fall due. In November, the Department of
Telecommunications granted a two-year spectrum moratorium to the
industry. In January, the Supreme Court rejected the review
petition filed by VIL and other industry participants in relation
to the AGR judgement. Both VIL and Bharti Airtel Limited have
subsequently filed modification petitions, which are expected to be
heard imminently, to request the Court to order the Department of
Telecommunications to determine a payment schedule in relation to
AGR dues and other reliefs.
ALTERNATIVE PERFORMANCE MEASURES
In the discussion of the Group's reported operating results,
alternative performance measures are presented to provide readers
with additional financial information that is regularly reviewed by
management. However, this additional information presented is not
uniformly defined by all companies including those in the Group's
industry. Accordingly, it may not be comparable with similarly
titled measures and disclosures by other companies. Additionally,
certain information presented is derived from amounts calculated in
accordance with IFRS but is not itself an expressly permitted GAAP
measure. Such measures should not be viewed in isolation or as an
alternative to the equivalent GAAP measure.
Further information on the use of alternative performance
measures is outlined on pages 231 to 245 of the Group's annual
report for the financial year ended 31 March 2019.
Service revenue
Service revenue comprises all revenue related to the provision
of ongoing services including, but not limited to, monthly access
charges, airtime usage, roaming, incoming and outgoing network
usage by non-Vodafone customers and interconnect charges for
incoming calls. We believe that it is both useful and necessary to
report this measure for the following reasons:
-- It is used for internal performance reporting;
-- It is used in setting director and management remuneration; and
-- It is useful in connection with discussion with the investment analyst community.
A reconciliation of reported service revenue to the respective
closest equivalent GAAP measure, revenue, is provided where used in
the Operating Review on pages 2 to 8.
Organic growth
All amounts in this document marked with an "*" represent
"organic growth", which presents performance on a comparable basis
in terms of merger and acquisition activity (notably by excluding
Vodafone New Zealand and the acquired European Liberty Global
assets), movements in foreign exchange rates and the impact of IFRS
16 'Leases'.
Whilst organic growth is neither intended to be a substitute for
reported growth, nor is it superior to reported growth, we believe
that this measure provides useful and necessary information to
investors and other interested parties for the following
reasons:
-- It provides additional information on underlying growth of the business without the effect
of certain factors unrelated to its operating performance;
-- It is used for internal performance analysis; and
-- It facilitates comparability of underlying growth with other companies (although the term
"organic" is not a defined term under IFRS and may not, therefore, be comparable with similarly
titled measures reported by other companies).
We have not provided a comparative in respect of organic growth
rates as the current rates describe the change between the
beginning and end of the current period, with such changes being
explained by the commentary in this news release. If comparatives
were provided, significant sections of the commentary from the news
release for prior periods would also need to be included, reducing
the usefulness and transparency of this document.
Reconciliations of organic growth to reported growth are shown
where used or in the tables below.
2019 2018
Other
activity
Reported (incl. Foreign Organic
(re-presented)(1) growth M&A) exchange growth*
EURm EURm % pps pps %
-------------------------- ------ ----------------- -------- --------- --------- --------
Quarter ended 31 December
- Service revenue
Germany 2,883 2,301 25.3 (25.3) - -
------ ----------------- -------- --------- --------- --------
Mobile service revenue 1,273 1,299 (2.0) (0.2) - (2.2)
Fixed service revenue 1,610 1,002 60.7 (57.9) - 2.8
--------------------------- ------ ----------------- -------- --------- --------- --------
Italy 1,220 1,284 (5.0) - - (5.0)
------ ----------------- -------- --------- --------- --------
Mobile service revenue 916 993 (7.8) 0.1 - (7.7)
Fixed service revenue 304 291 4.5 (0.3) - 4.2
--------------------------- ------ ----------------- -------- --------- --------- --------
UK 1,282 1,235 3.8 - (3.2) 0.6
------ ----------------- -------- --------- --------- --------
Mobile service revenue 924 890 3.8 - (3.2) 0.6
Fixed service revenue 358 345 3.8 - (3.3) 0.5
--------------------------- ------ ----------------- -------- --------- --------- --------
Spain 966 1,039 (7.0) 0.5 - (6.5)
Other Europe 1,265 1,119 13.0 (10.0) - 3.0
------ ----------------- -------- --------- --------- --------
Of which: Ireland 209 209 - 0.1 - 0.1
Of which: Portugal 248 234 6.0 (0.1) - 5.9
Of which: Greece 219 220 (0.5) 2.4 - 1.9
--------------------------- ------ ----------------- -------- --------- --------- --------
Eliminations (30) (25)
--------------------------- ------ ----------------- -------- --------- --------- --------
Europe 7,586 6,953 9.1 (9.9) (0.6) (1.4)
--------------------------- ------ ----------------- -------- --------- --------- --------
Vodacom 1,162 1,096 6.0 - (0.8) 5.2
------ ----------------- -------- --------- --------- --------
Of which: South Africa 834 795 4.9 - (0.3) 4.6
Of which: International
operations 330 301 9.6 - (2.2) 7.4
--------------------------- ------ ----------------- -------- --------- --------- --------
Other Markets 891 1,009 (11.7) 28.0 (1.8) 14.5
------ ----------------- -------- --------- --------- --------
Of which: Turkey 481 432 11.3 3.1 2.9 17.3
Of which: Egypt 356 274 29.9 - (16.0) 13.9
--------------------------- ------ ----------------- -------- --------- --------- --------
Eliminations - -
--------------------------- ------ ----------------- -------- --------- --------- --------
Rest of the World 2,053 2,105 (2.5) 12.9 (1.3) 9.1
--------------------------- ------ ----------------- -------- --------- --------- --------
Other 117 109
Eliminations (23) (14)
--------------------------- ------ ----------------- -------- --------- --------- --------
Total service revenue 9,733 9,153 6.3 (4.8) (0.7) 0.8
Other revenue 2,017 1,845 9.3 1.3 (0.4) 10.2
--------------------------- ------ ----------------- -------- --------- --------- --------
Revenue 11,750 10,998 6.8 (3.7) (0.7) 2.4
--------------------------- ------ ----------------- -------- --------- --------- --------
Quarter ended 31 December
Other growth metrics
Germany - Mobile retail revenue
excluding 1,244 1,236 0.6 (0.2) -0.4
regulatory impact
Germany - Fixed retail revenue 1,560 951 64.0 (60.9) -3.1
Germany - Retail revenue 2,791 2,187 27.6 (26.6) -1.0
--------------------------------- ----- ----- ---- ------ ---
Note:
1. The comparative results were previously disclosed on an IAS
18 basis in the trading update for the 3 months ended 31 December
2018. These comparative results have been re-presented in the table
above on an IFRS 15 basis.
2019 2018
Other
activity
Reported (incl. Foreign Organic
(re-presented)(1) growth M&A) exchange growth*
EURm EURm % pps pps %
--------------------------- ------ ----------------- -------- --------- --------- --------
Quarter ended 30 September
- Service revenue
Germany 2,696 2,320 16.2 (16.4) - (0.2)
------ ----------------- -------- --------- --------- --------
Mobile service revenue 1,289 1,321 (2.4) (0.3) - (2.7)
Fixed service revenue 1,407 999 40.8 (37.8) - 3.0
---------------------------- ------ ----------------- -------- --------- --------- --------
Italy 1,226 1,267 (3.2) - - (3.2)
------ ----------------- -------- --------- --------- --------
Mobile service revenue 934 999 (6.5) - - (6.5)
Fixed service revenue 292 268 9.0 0.1 - 9.1
---------------------------- ------ ----------------- -------- --------- --------- --------
UK 1,218 1,231 (1.1) - 1.1 -
------ ----------------- -------- --------- --------- --------
Mobile service revenue 888 905 (1.9) - 1.2 (0.7)
Fixed service revenue 330 326 1.2 - 1.0 2.2
---------------------------- ------ ----------------- -------- --------- --------- --------
Spain 978 1,068 (8.4) 0.4 - (8.0)
Other Europe 1,264 1,141 10.8 (7.6) 0.1 3.3
------ ----------------- -------- --------- --------- --------
Of which: Ireland 215 208 3.4 (2.5) - 0.9
Of which: Portugal 254 241 5.4 (0.1) - 5.3
Of which: Greece 237 224 5.8 (1.4) - 4.4
---------------------------- ------ ----------------- -------- --------- --------- --------
Eliminations (44) (36)
---------------------------- ------ ----------------- -------- --------- --------- --------
Europe 7,338 6,991 5.0 (6.6) 0.2 (1.4)
---------------------------- ------ ----------------- -------- --------- --------- --------
Vodacom 1,139 1,086 4.9 - (1.3) 3.6
------ ----------------- -------- --------- --------- --------
Of which: South Africa 811 794 2.1 - (0.3) 1.8
Of which: International
operations 329 292 12.7 - (3.0) 9.7
---------------------------- ------ ----------------- -------- --------- --------- --------
Other Markets 988 971 1.8 19.5 (4.9) 16.4
------ ----------------- -------- --------- --------- --------
Of which: Turkey 499 402 24.1 - (4.3) 19.8
Of which: Egypt 356 272 30.9 - (15.3) 15.6
---------------------------- ------ ----------------- -------- --------- --------- --------
Eliminations - -
---------------------------- ------ ----------------- -------- --------- --------- --------
Rest of the World 2,127 2,057 3.4 8.5 (3.0) 8.9
---------------------------- ------ ----------------- -------- --------- --------- --------
Other 117 115
Eliminations (32) (25)
---------------------------- ------ ----------------- -------- --------- --------- --------
Total service revenue 9,550 9,138 4.5 (3.2) (0.6) 0.7
Other revenue 1,736 1,808 (4.0) (1.7) (0.1) (5.8)
---------------------------- ------ ----------------- -------- --------- --------- --------
Revenue 11,286 10,946 3.1 (3.0) (0.5) (0.4)
---------------------------- ------ ----------------- -------- --------- --------- --------
Quarter ended 30 September
Other growth metrics
Germany - Mobile retail revenue
excluding 1,254 1,252 0.2 (0.3) -(0.1)
regulatory impact
Germany - Fixed retail revenue 1,355 945 43.4 (40.0) - 3.4
Germany - Retail revenue 2,594 2,197 18.1 (17.4) - 0.7
Note:
1. The comparative results were previously disclosed on an IAS
18 basis in the trading update for the 3 months ended 31 December
2018. These comparative results have been re-presented in the table
above on an IFRS 15 basis.
ADDITIONAL INFORMATION
Revenue - Quarter ended 31 December(1)
Group and Regions Group Europe Rest of the World
-------------- ------------ -------------------
2019 2018 2019 2018 2019 2018
EURm EURm EURm EURm EURm EURm
------ ------ ----- ----- --------- --------
Mobile customer revenue 5,715 5,779 4,028 4,121 1,676 1,654
Mobile incoming revenue 437 462 310 325 139 138
Other service revenue 480 452 317 311 104 86
------ ------ ----- ----- --------- --------
Mobile service revenue 6,632 6,693 4,655 4,757 1,919 1,878
Fixed service revenue 3,101 2,460 2,931 2,196 134 227
------ ------ ----- ----- --------- --------
Service revenue 9,733 9,153 7,586 6,953 2,053 2,105
Other revenue 2,017 1,845 1,384 1,195 426 443
------ ------ ----- ----- --------- --------
Revenue 11,750 10,998 8,970 8,148 2,479 2,548
------ ------ ----- ----- --------- --------
Operating Companies Germany Italy UK
-------------- ------------ -------------------
2019 2018 2019 2018 2019 2018
EURm EURm EURm EURm EURm EURm
------ ------ ----- ----- --------- --------
Mobile customer revenue 1,112 1,124 776 852 790 761
Mobile incoming revenue 51 51 74 84 66 68
Other service revenue 110 124 66 57 68 61
------ ------ ----- ----- --------- --------
Mobile service revenue 1,273 1,299 916 993 924 890
Fixed service revenue 1,610 1,002 304 291 358 345
------ ------ ----- ----- --------- --------
Service revenue 2,883 2,301 1,220 1,284 1,282 1,235
Other revenue 416 355 209 229 443 309
------ ------ ----- ----- --------- --------
Revenue 3,299 2,656 1,429 1,513 1,725 1,544
------ ------ ----- ----- --------- --------
Spain Vodacom
-------------- ------------
2019 2018 2019 2018
EURm EURm EURm EURm
------ ------ ----- -----
Mobile customer revenue 561 610 977 942
Mobile incoming revenue 32 32 40 39
Other service revenue 38 38 75 50
------ ------ ----- -----
Mobile service revenue 631 680 1,092 1,031
Fixed service revenue 335 359 70 65
------ ------ ----- -----
Service revenue 966 1,039 1,162 1,096
Other revenue 112 120 290 263
------ ------ ----- -----
Revenue 1,078 1,159 1,452 1,359
------ ------ ----- -----
Note:
1. The comparative results were previously disclosed on an IAS
18 basis in the trading update for the 3 months ended 31 December
2018. These comparative results have been re-presented in the table
above on an IFRS 15 basis.
OTHER INFORMATION
Definition of terms
Term Definition
Adjusted EBITDA Operating profit after depreciation on lease-related
right of use assets and interest on leases but excluding
depreciation, amortisation and gains/losses on disposal
for owned fixed assets and excluding share of results
in associates and joint ventures, impairment losses,
restructuring costs arising from discrete restructuring
plans, other operating income and expense and significant
items that are not considered by management to be reflective
of the underlying performance of the Group.
-----------------------------------------------------------------
ARPU Average revenue per user, defined as customer revenue
and incoming revenue, divided by average customers.
-----------------------------------------------------------------
Churn Total gross customer disconnections in the period, divided
by the average total customers in the period.
-----------------------------------------------------------------
Converged A customer who receives both fixed and mobile services
customer (also known as unified communications) on a single bill
or who receives a discount across both bills.
-----------------------------------------------------------------
EC European Commission.
-----------------------------------------------------------------
Europe region The Group's region, Europe, which comprises the European
operating segments.
-----------------------------------------------------------------
Free cash Operating free cash flow after cash flows in relation
flow ("FCF") to taxation, interest, dividends received from associates
and investments and dividends paid to non-controlling
shareholders in subsidiaries, but before restructuring
costs arising from discrete restructuring plans and licence
and spectrum payments.
-----------------------------------------------------------------
Fixed service Service revenue relating to provision of fixed line ('fixed')
revenue and carrier services.
-----------------------------------------------------------------
IAS 18 International Accounting Standard 18 "Revenue". The previous
revenue accounting standard that applied to the Group's
statutory results for all reporting periods up to and
including the quarter ended 31 March 2018.
-----------------------------------------------------------------
IFRS 15 International Financial Reporting Standard 15 "Revenue".
The accounting policy adopted on 1 April 2018.
-----------------------------------------------------------------
IFRS 16 International Financial Reporting Standard 16 "Leases".
The accounting policy adopted on 1 April 2019.
-----------------------------------------------------------------
Incoming revenue Comprises revenue from termination rates from voice and
messaging to Vodafone customers.
-----------------------------------------------------------------
Internet of The network of physical objects embedded with electronics,
Things ("IoT") software, sensors, and network connectivity, including
built-in mobile SIM cards, that enables these objects
to collect data and exchange communications with one
another or a database.
-----------------------------------------------------------------
Mobile customer Represents revenue from mobile customers from bundles
revenue that include a specified number of minutes, messages
or megabytes of data that can be used for no additional
charge ('in-bundle') and revenues from minutes, messages
or megabytes of data which are in excess of the amount
included in customer bundles ('out-of-bundle'). Mobile
in-bundle and out-of-bundle revenues, previously disclosed
separately, are now combined to simplify the presentation
of the Group's results.
-----------------------------------------------------------------
Mobile service Service revenue relating to the provision of mobile services.
revenue
-----------------------------------------------------------------
Next generation Fibre or cable networks typically providing high-speed
networks ("NGN") broadband over 30Mbps.
-----------------------------------------------------------------
Organic growth An alternative performance measure which presents performance
on a comparable basis, both in terms of merger and acquisition
activity (notably by excluding Vodafone New Zealand and
the acquired European Liberty Global assets), movements
in foreign exchange rates and the impact of the implementation
of IFRS 16 'Leases'.
-----------------------------------------------------------------
Other Europe Other Europe markets include Portugal, Ireland, Greece,
Romania, Czech Republic, Hungary, Albania and Malta.
-----------------------------------------------------------------
Other Markets Other Rest of the World markets include Turkey, Egypt
and Ghana.
-----------------------------------------------------------------
Regulation Impact of industry specific law and regulations covering
telecommunication services. The impact of regulation
on service revenue in European markets comprises the
effect of changes in European mobile termination rates
and changes in out-of-bundle roaming revenues less the
increase in visitor revenues.
-----------------------------------------------------------------
Reported growth Reported growth is based on amounts reported in euros
as determined under IFRS.
-----------------------------------------------------------------
Rest of the The Group's region, Rest of the World, which comprises
World ("RoW") Vodacom, Turkey and Other Markets operating segments.
region
-----------------------------------------------------------------
RGUs Revenue Generating Units describes the average number
of fixed line services taken by subscribers.
-----------------------------------------------------------------
Roaming Impact of European roaming, defined as the increase in
visitor revenues less the increase in roaming costs and
the decline in out-of-bundle roaming revenues.
-----------------------------------------------------------------
Service revenue Service revenue comprises all revenue related to the
provision of ongoing services including, but not limited
to, monthly access charges, airtime usage, roaming, incoming
and outgoing network usage by non-Vodafone customers
and interconnect charges for incoming calls.
-----------------------------------------------------------------
Vodafone Business Vodafone Business is part of the Group and partners with
businesses of every size to provide a range of business-related
services.
-----------------------------------------------------------------
Notes:
1. All figures in this trading update are unaudited.
2. References to Vodafone are to Vodafone Group Plc and
references to Vodafone Group are to Vodafone Group Plc and its
subsidiaries unless otherwise stated. Vodafone, the Vodafone
Portrait, the Vodafone Speech Mark, Vodafone Broken Speech Mark
Outline, Vodacom, Vodafone One, The future is exciting. Ready? and
M-Pesa, are trademarks owned by Vodafone. Other product and company
names mentioned herein may be the trademarks of their respective
owners.
3. All growth rates reflect a comparison to the three months
ended 31 December 2018 unless otherwise stated.
4. References to "Q2" and "Q3" are to the three months ended 30
September 2019 and 31 December 2019, respectively, unless otherwise
stated. References to "half year", "first half" or "H1" are to the
six months ended 30 September 2019 unless otherwise stated.
References to the "year", "financial year" or "2020 financial year"
are to the financial year ending 31 March 2020 and references to
the "last year" or "last financial year" are to the financial year
ended 31 March 2019 unless otherwise stated.
5. Vodacom refers to the Group's interest in Vodacom Group
Limited ('Vodacom') in South Africa as well as its subsidiaries,
including its operations in the DRC, Lesotho, Mozambique and
Tanzania.
6. Quarterly historical information, including information for
service revenue, mobile customers, mobile churn, mobile data usage,
mobile ARPU and certain fixed line and convergence metrics, is
provided in a spreadsheet available at vodafone.com/investor.
7. This trading update contains references to our website.
Information on our website is not incorporated into this update and
should not be considered part of this update. We have included any
website as an inactive textual reference only.
Forward-looking statements
This report contains "forward-looking statements" within the
meaning of the US Private Securities Litigation Reform Act of 1995
with respect to the Group's financial condition, results of
operations and businesses and certain of the Group's plans and
objectives.
In particular, such forward-looking statements include, but are
not limited to, statements with respect to: expectations regarding
the Group's financial condition or results of operations and the
guidance for organic adjusted EBITDA, free cash flow pre-spectrum,
operating expenses and financial leverage for the financial year
ending 31 March 2020; prospects for the 2020 financial year;
operating expenses for the financial year ending 31 March 2021;
expectations for the Group's future performance generally,
including growth and capital expenditure; expectations regarding
the operating environment and market conditions and trends,
including customer usage, competitive position and macroeconomic
pressures, spectrum auctions and awards, price trends and
opportunities in specific geographic markets; intentions and
expectations regarding the development, launch and expansion of
products, services and technologies, either introduced by Vodafone
or by Vodafone in conjunction with third parties or by third
parties independently including 5G networks, sharing infrastructure
and its benefits, sharing mobile networks in Europe and the
expansion of NGN broadband within Vodafone's European footprint;
expectations regarding free cash flow, foreign exchange rate
movements and tax rates; expectations regarding the integration or
performance of current and future investments, associates, joint
ventures, non-controlled interests and newly acquired businesses,
including in respect of the Group's sale of its 55% shareholding in
Vodafone Egypt and the sale of Vodafone Malta, and the LTM adjusted
EBITDA and Adjusted OpFCF multiples therefrom, the
operationalisation of European TowerCo and the INWIT merger, and
the integration of the acquired European Liberty Global assets and
the VodafoneZiggo joint venture; the outcome and impact of
regulatory and legal proceedings involving Vodafone and of
scheduled or potential legislative and regulatory changes,
including approvals, reviews and consultations.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
"will", "anticipates", "aims", "could", "may", "should", "expects",
"believes", "intends", "plans" ,"prepares" or "targets" (including
in their negative form or other variations). By their nature,
forward-looking statements are inherently predictive, speculative
and involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future.
There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements. These factors include, but are
not limited to, the following: external cyber-attacks, insider
threats or supplier breaches; general economic and political
conditions of the jurisdictions in which the Group operates,
including as a result of Brexit, and changes to the associated
legal, regulatory and tax environments; increased competition;
increased disintermediation; levels of investment in network
capacity and the Group's ability to deploy new technologies,
products and services; rapid changes to existing products and
services and the inability of new products and services to perform
in accordance with expectations; the ability of the Group to
integrate new technologies, products and services with existing
networks, technologies, products and services; the Group's ability
to generate and grow revenue; a lower than expected impact of new
or existing products, services or technologies on the Group's
future revenue, cost structure and capital expenditure outlays;
slower than expected customer growth, reduced customer retention,
reductions or changes in customer spending and increased pricing
pressure; the Group's ability to expand its spectrum position, win
3G, 4G and 5G allocations and realise expected synergies and
benefits associated with 3G, 4G and 5G; the Group's ability to
secure the timely delivery of high-quality products from suppliers;
loss of suppliers, disruption of supply chains and greater than
anticipated prices of new mobile handsets; changes in the costs to
the Group of, or the rates the Group my charge for, terminations
and roaming minutes; the impact of a failure or significant
interruption to the Group's telecommunications, networks, IT
systems or data protection systems; the Group's ability to realise
expected benefits from acquisitions, partnerships, joint ventures,
franchises, brand licences, platform sharing or other arrangements
with third parties; acquisitions and divestments of Group
businesses and assets and the pursuit of new, unexpected strategic
opportunities; the Group's ability to integrate acquired business
or assets; the extent of any future write-downs or impairment
charges on the Group's assets, or restructuring charges incurred as
a result of an acquisition or disposition; a developments in the
Group's financial condition, earnings and distributable funds and
other factors that the Board takes into account in determining the
level of dividends; the Group's ability to satisfy working capital
requirements; changes in foreign exchange rates; changes in the
regulatory framework in which the Group operates; the impact of
legal or other proceedings against the Group or other companies in
the communications industry and changes in statutory tax rates and
profit mix.
Furthermore, a review of the reasons why actual results and
developments may differ materially from the expectations disclosed
or implied within forward-looking statements can be found under
"Forward-looking statements" and "Principal risk factors and
uncertainties" in the Group's annual report for the financial year
ended 31 March 2019. The annual report can be found on the Group's
website (vodafone.com/investor). All subsequent written or oral
forward-looking statements attributable to the Company or any
member of the Group or any persons acting on their behalf are
expressly qualified in their entirety by the factors referred to
above. No assurances can be given that the forward-looking
statements in this document will be realised. Any forward-looking
statements are made of the date of this presentation. Subject to
compliance with applicable law and regulations, Vodafone does not
intend to update these forward-looking statements and does not
undertake any obligation to do so.
For further information:
Vodafone Group Plc
Investor Relations Media Relations
ir@vodafone.co.uk www.vodafone.com/media/contact
Copyright (c) Vodafone Group 2020
- ends -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTDDGDDSDGDGGS
(END) Dow Jones Newswires
February 05, 2020 02:00 ET (07:00 GMT)
Vodafone (LSE:VOD)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Vodafone (LSE:VOD)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
