2007 Financial Year Compared to the 2006 Financial Year
EMAPA
Revenue
Revenue increased by 41.4%, or 21.1% on an organic basis, driven by organic service revenue growth of 20.4%. The impact of acquisitions, disposal and exchange rates on service revenue and revenue growth is shown below.
| Organic growth % | Impact of exchange rates Percentage points |
Impact of acquisitions and disposal(1) Percentage points |
Reported growth % | |
|---|---|---|---|---|
| Service revenue | ||||
| Eastern Europe | 20.0 | (5.6) | 61.7 | 76.1 |
| Middle East, Africa and Asia | 27.7 | (17.7) | 33.5 | 43.5 |
| Pacific | 10.0 | (7.3) | – | 2.7 |
| EMAPA | 20.4 | (10.9) | 32.8 | 42.3 |
| Revenue – EMAPA | 21.1 | (11.2) | 31.5 | 41.4 |
| Note: | |
|---|---|
| (1) | Impact of acquisitions and disposal includes the impact of the change in consolidation status of Bharti Airtel from a joint venture to an investment. |
Organic service revenue growth was driven by the 30.2% organic increase in the average mobile customer base and the success of usage stimulation initiatives, partially offset by declining ARPU in a number of markets due to the higher proportion of lower usage prepaid customer additions.
Particularly strong customer growth was achieved in Eastern Europe and the Middle East, Africa and Asia, where markets are typically less penetrated than in Western Europe or the Pacific area.
Non-service revenue increased by 31.5%, or 28.9% on an organic basis, primarily due to an increase in the level of gross additions in a number of countries.
Eastern Europe
In Eastern Europe, service revenue grew by 76.1%, with the key driver of growth being the acquisitions in the Czech Republic and Turkey, as well as the stake increase in Romania. Good customer growth in all Eastern European markets contributed to the organic service revenue growth.
Organic service revenue growth in Eastern Europe was principally driven by Romania. As a result of the growth in the customer base and a promotional offer of lower tariffs, which led to higher voice usage, constant currency service revenue in Romania grew by 29.4%, calculated by applying the Group’s equity interest at 31 March 2007 to the whole of the 2006 financial year. The continued expansion of 3G network coverage, the successful launch of 3G broadband, together with introductory promotional offers, and increased sales of Vodafone Mobile Connect data cards, resulted in data revenue growth of 66.7% at constant exchange rates.
In the Czech Republic, a focus on existing customers, including a Christmas campaign of free weekend text messages available to all existing as well as new customers, and the success of a business offering allowing unlimited on and off net calls within a customers’ virtual private network for a fixed monthly fee, had a positive impact on gross additions and drove the increase in average mobile customers. This led to growth of 11.1% in service revenue at constant exchange rates, calculated by applying the Group’s equity interest at 31 March 2007 to the whole of the 2006 financial year.
Vodafone Turkey performed ahead of the expectations the Group had at the time of the completion of the acquisition, with customer numbers, usage and adjusted operating profit ahead of plan. Improvements in network reliability and coverage have contributed to strong customer growth and allowed an increase in prepaid tariffs, resulting in service revenue growth. Telsim was rebranded to Vodafone in March 2007, with the launch of a new tariff with inclusive on and off net calls, a first for the Turkish market.
Middle East, Africa and Asia
The service revenue growth of 43.5% in the Middle East, Africa and Asia resulted primarily from the stake increases in South Africa in February 2006 and Egypt in December 2006, together with the acquisition of the Group’s interest in Bharti Airtel in India in December 2005, offset by an adverse movement in exchange rates. Strong organic growth was achieved in all markets, particularly in Egypt and South Africa, driven by the 40.2% increase in the average mobile customer base compared to the 2006 financial year.
Strong customer growth, driven by prepaid tariff reductions, the availability of lower cost handsets and high customer satisfaction with the Vodafone service, contributed to the 39.5% constant currency service revenue growth in Egypt.
Innovative new products and services, including a new hybrid tariff offering guaranteed airtime credit every month with the ability to top up as required, and successful promotions, led to an increase in the average mobile customer base and 21.6% constant currency organic service revenue growth in South Africa, while the continued rollout of the 3G network led to strong growth in data revenue.
Bharti Airtel continued to perform well with strong growth in customers and revenue, demonstrating the growth potential in the Indian market.
Pacific
Service revenue increased by 2.7%, with the impact of adverse foreign exchange movements reducing reported growth by 7.3 percentage points. In Australia, a continued focus on higher value customers delivered constant currency service revenue growth of 13.7%, with improvements in both prepaid and contract ARPU. The performance in Australia more than offset the reduced growth in constant currency service revenue in New Zealand, where constant currency service revenue growth was 2.7% following a cut in termination rates, which reduced reported service revenue growth by 4.1%. After the negative impact of foreign exchange movements, reported service revenue in New Zealand declined by 7.9%.