Operating results
2009 financial year compared to the 2008 financial year
Asia Pacific and Middle East(1)
India |
Other |
Eliminations |
Asia Pacific and Middle East |
% change | |||
|---|---|---|---|---|---|---|---|
| £m | £m | £m | £m | £ | Organic | ||
| Year ended 31 March 2009 | |||||||
| Revenue | 2,689 | 3,131 | (1) | 5,819 | 32.3 | 9.3 | |
| Service revenue | 2,604 | 2,831 | (1) | 5,434 | 32.5 | 8.5 | |
| EBITDA | 710 | 1,029 | − | 1,739 | 17.8 | 7.3 | |
| Adjusted operating profit | (37) | 562 | − | 525 | (0.9) | 6.6 | |
| EBITDA margin | 26.4% | 32.9% | 29.9% | ||||
| Year ended 31 March 2008 | |||||||
| Revenue | 1,822 | 2,577 | − | 4,399 | |||
| Service revenue | 1,753 | 2,348 | − | 4,101 | |||
| EBITDA | 598 | 878 | − | 1,476 | |||
| Adjusted operating profit | 35 | 495 | − | 530 | |||
| EBITDA margin | 32.8% | 34.1% | 33.6% | ||||
Note:
- (1)
- The Group revised its segment structure during the year. See note 3 to the consolidated financial statements.
Revenue increased by 32.3%, including the contribution from favourable exchange rate movements in addition to the benefit from acquisitions, primarily in India. Revenue growth on a pro forma basis was 19%, reflecting the growth in India, Egypt and Australia. On an organic basis, service revenue increased by 8.5%, primarily as a result of the 27.3% organic rise in the average customer base, although revenue growth has slowed as a result of stronger competition coupled with maturing market conditions.
EBITDA grew by 17.8%, with favourable exchange rate movements and the positive impact of acquisitions contributing to the growth. On a pro forma basis including India, EBITDA increased by 6%. The decline in the EBITDA margin resulted from positive performances in India and Egypt being mitigated by a decline in Australia.
The impact of merger and acquisition activity and foreign exchange movements on revenue, service revenue, EBITDA and adjusted operating profit are shown below:
| Organic growth % |
M&A activity pps |
Foreign exchange pps |
Reported growth % |
|
|---|---|---|---|---|
| Revenue | ||||
| Asia Pacific and Middle East | 9.3 | 13.3 | 9.7 | 32.3 |
| Service revenue | ||||
| India | – | 42.5 | 6.0 | 48.5 |
| Other | 8.5 | 0.3 | 11.8 | 20.6 |
| Asia Pacific and Middle East | 8.5 | 14.2 | 9.8 | 32.5 |
| EBITDA | ||||
| India | – | 14.1 | 4.6 | 18.7 |
| Other | 7.3 | (3.4) | 13.3 | 17.2 |
| Asia Pacific and Middle East | 7.3 | 0.6 | 9.9 | 17.8 |
| Adjusted operating profit | ||||
| India | – | (100+) | (12.6) | (100+) |
| Other | 6.6 | (6.8) | 14.0 | 13.8 |
| Asia Pacific and Middle East | 6.6 | (19.7) | 12.2 | (0.9) |
India
Revenue grew by 33% on a pro forma basis, with growth in the fourth quarter of 27.7% at constant exchange rates. Growth in the fourth quarter remained stable in comparison to the third quarter as the eight percentage point benefit of the new revenue stream from the network sharing joint venture, Indus Towers, which launched during the first half of the year, offset the slowing underlying growth rate. Visitor revenue increased, albeit at a lower rate, due to the impact of economic pressures as people travel less. Lower effective rates per minute reflecting price reductions earlier in the year, coupled with the continued market shift to lifetime validity prepaid offerings, led to a reduction in customer churn. The lower effective rate and a slight fall in usage per customer were mitigated by net customer additions, which averaged 2.1 million per month, and the launch of services in seven new circles, bringing the closing customer base to 68.8 million. Customer penetration in the Indian mobile market reached 34% at 31 March 2009.
EBITDA grew by 5% on a pro forma basis. Customer costs as a percentage of revenue decreased, benefiting from economies of scale. Licensing costs increased as discounts received from the regulator in some service areas were terminated. Network expansion continued, with an average of 2,600 base stations constructed per month, primarily in the new circles. Site sharing increased and Indus Towers steadily increased its operations throughout the rest of the year, with 95,000 sites under its management at the end of March 2009.
Other Asia Pacific and Middle East
The organic increase in service revenue of 8.5% was attributable to performances in Egypt and Australia. In Egypt, service revenue grew by 11.9% at constant exchange rates, as growth in the customer base and increased usage per customer were partially offset by a decline in the effective rate per minute as a result of the introduction of new tariffs in addition to lower termination rates and a fall in both visitor revenue and the enterprise segment revenue as people travelled less. Service revenue in Australia increased by 6.1% on an organic basis, due to an increase in the average customer base and good data revenue growth, especially in mobile broadband services. These were partially offset by lower ARPU, reflecting strong competition, which led to a lower revenue growth rate in the fourth quarter. In New Zealand, service revenue grew by 4.9% at constant exchange rates, a result of an increase in the fixed broadband customer base and growth in data services, the latter following increased penetration of mobile PC connectivity devices. These benefits were partially offset by the competitive and recessionary trends in the market.
EBITDA grew organically by 7.3%, with a decline in the EBITDA margin, as the increase in Egypt was offset by the decline in Australia. Egypt’s EBITDA grew by 15.9% at constant exchange rates in proportion to revenue, with a slight increase in margin, despite the inclusion of 3G licensing fees for the full year in comparison to only part of the prior year. In Australia, EBITDA decreased by 17.6% on an organic basis, primarily due to a loss provision related to a prepaid recharge vendor and an increased focus on contract customers resulting in higher customer costs.
In February 2009, the Group and Hutchison Telecommunications (Australia) Limited agreed to merge their Australian operations to form a 50:50 joint venture. The transaction is expected to complete in the first half of the 2010 financial year. Following completion, the joint venture will be proportionately consolidated.
On 10 May 2009, Vodafone Qatar completed a public offering of 40% of its authorised share capital, raising QAR 3.4 billion (£0.6 billion). The shares are expected to be listed on the Doha securities market by July 2009.