2010 financial year compared to the 2009 financial year
Group(1)(2)
| Europe £m | Africa and Central Europe £m | Asia Pacific and Middle East £m | Verizon Wireless £m | Common Functions(3) £m | Eliminations £m | 2010 £m | 2009 £m | % change | ||
|---|---|---|---|---|---|---|---|---|---|---|
| £ | Organic(4) | |||||||||
| Revenue | 29,878 | 8,026 | 6,481 | – | 269 | (182) | 44,472 | 41,017 | 8.4 | (2.3) |
| Service revenue | 28,310 | 7,405 | 6,146 | – | 6 | (148) | 41,719 | 38,294 | 8.9 | (1.6) |
| EBITDA | 10,927 | 2,327 | 1,840 | – | (359) | – | 14,735 | 14,490 | 1.7 | (7.4) |
| Adjusted operating profit | 6,918 | 527 | 358 | 4,112 | (449) | – | 11,466 | 11,757 | (2.5) | (7.0) |
| Adjustments for: | ||||||||||
| Impairment losses, net | (2,100) | (5,900) | ||||||||
| Other income and expense | 114 | − | ||||||||
| Operating profit | 9,480 | 5,857 | ||||||||
| Non-operating income and expense | (10) | (44) | ||||||||
| Net financing costs | (796) | (1,624) | ||||||||
| Profit before taxation | 8,674 | 4,189 | ||||||||
| Income tax expense | (56) | (1,109) | ||||||||
| Profit for the financial year | 8,618 | 3,080 | ||||||||
- Notes:
- (1)
- The Group revised how it determines and discloses segmental EBITDA and adjusted operating profit during the year. See note 3 to the consolidated financial statements.
- (2)
- Current year results reflect average exchange rates of £1:€1.13 and £1:US$1.60.
- (3)
- Common Functions primarily represents the results of the partner markets and the net result of unallocated central Group costs and excludes income from intercompany royalty fees.
- (4)
- Organic growth includes India and Vodacom (except the results of Gateway) at the current level of ownership but excludes Australia following the merger with Hutchison 3G Australia on 9 June 2009. See “Acquisitions” for further details.
Revenue
Group revenue increased by 8.4% to £44,472 million, with favourable exchange rates contributing 5.7 percentage points of growth and merger and acquisition activity contributing 5.0 percentage points. During the year the Group acquired an additional 15% stake in Vodacom and fully consolidated its results from 18 May 2009.
Group service revenue increased by 8.9% to £41.7 billion, while organic service revenue declined by 1.6%(*). Service revenue was impacted by challenging economic conditions in Europe and Central Europe offset by growth in Africa, Asia Pacific and the Middle East.
In Europe service revenue fell 3.5%(*), a 1.8 percentage point decline on the previous year reflecting challenging economic conditions in most markets offset by growth in Italy and the Netherlands. The decline was primarily driven by reduced voice revenue resulting from continued market and regulatory pressure on pricing and slower usage growth partially offset by growth in data and fixed line. Data revenue grew by 17.7%(*) due to an increase in data plans sold with smartphones and good PC connectivity revenue across the region. Fixed line revenue increased by 7.7%(*) with the number of fixed broadband customers reaching 5.4 million at 31 March 2010, a net increase of 960,000 customers during the financial year.
In Africa and Central Europe service revenue fell by 1.2%(*), a 4.3 percentage point decline on the previous year resulting from challenging economic conditions in Central Europe, mobile termination rate cuts across the region and competition led pricing movements in Romania partially offset by strong growth in Vodacom. Turkey returned to growth in the second half of the financial year with service revenue growing 31.3%(*) in the fourth quarter. Romania experienced intense competition throughout the year with service revenue declining 19.9%(*). Mobile termination rate cuts across Central Europe, which became effective during the year, contributed 3.4 percentage points to the decline in service revenue.
In Asia Pacific and Middle East service revenue increased by 9.8%(*). India’s service revenue increased by 14.7%(*), 4.7 percentage points of which was delivered by the network sharing joint venture Indus Towers with the remainder being driven by a 46.7% increase in the mobile customer base offset in part by a decline in mobile voice pricing. In Egypt service revenue grew by 1.3%(*) and Qatar increased its mobile customer base to 465,000, following the launch of services in July.
Operating profit
EBITDA increased by 1.7% to £14,735 million, with favourable exchange rates contributing 5.8 percentage points and the impact of merger and acquisition activity, primarily the full consolidation of Vodacom, contributing 3.3 percentage points to EBITDA growth.
In Europe, EBITDA decreased by 7.3%(*), with a decline in the EBITDA margin of 1.0 percentage point, primarily driven by the downward revenue trend and the growth of lower margin fixed line operations partially offset by operating and direct cost savings.
Africa and Central Europe’s EBITDA decreased by 5.8%(*) resulting from reduced EBITDA margins across the majority of Central Europe due to challenging economic conditions and investment in Turkey to drive growth in the second half of the financial year. Strong revenue growth in Vodacom, combined with direct and customer cost savings partially offset the decline in Central Europe.
In Asia Pacific and Middle East EBITDA increased by 1.4%(*), with growth in India being partially offset by declines in other markets due to pricing and recessionary pressure and the start-up in Qatar.
Operating profit increased primarily due to changes in impairment losses. In the 2010 financial year, the Group recorded net impairment losses of £2,100 million. Vodafone India was impaired by £2,300 million primarily due to intense price competition following the entry of a number of new operators into the market. This was partially offset by a £200 million reversal in relation to Vodafone Turkey resulting primarily from movements in discount rates. In the prior year impairment losses of £5,900 million were recorded.
Adjusted operating profit decreased by 2.5%, or 7.0%(*) on an organic basis, with a 6.0 percentage point contribution from favourable exchange rates, whilst the impact of merger and acquisition activity reduced adjusted operating profit growth by 1.5 percentage points.
The share of results in Verizon Wireless, the Group’s associate in the US, increased by 8.0%(*) primarily due to the expanding customer base, robust data revenue and operating expenses efficiencies partially offset by higher customer acquisition and retention costs.
Net financing costs
| 2010 £m | 2009 £m |
|
|---|---|---|
| Investment income | 716 | 795 |
| Financing costs | (1,512) | (2,419) |
| Net financing costs | (796) | (1,624) |
| Analysed as: | ||
| Net financing costs before dividends from investments | (1,024) | (1,480) |
| Potential interest charges arising on settlement of outstanding tax issues(1) | (23) | 81 |
| Dividends from investments | 145 | 110 |
| Foreign exchange(2) | (1) | 235 |
| Equity put rights and similar arrangements(3) | (94) | (570) |
| Interest on settlement of German tax claim(4) | 201 | – |
| (796) | (1,624) |
- Notes:
- (1)
- Excluding interest on settlement of German tax claim.
- (2)
- Comprises foreign exchange differences reflected in the income statement in relation to certain intercompany balances and the foreign exchange differences on financial instruments received as consideration in the disposal of Vodafone Japan to SoftBank in April 2006.
- (3)
- Primarily represents foreign exchange movements and accretion expense. Further details of these options are provided here.
- (4)
- See “Taxation” below for further details.
Net financing costs before dividends from investments decreased from £1,480 million to £1,024 million primarily due to the impact of significantly lower interest rates given our preference for floating rate borrowing, partially offset by the 13.4% increase in average net debt being offset by changes in the currency mix of debt. At 31 March 2010 the provision for potential interest charges arising on settlement of outstanding tax issues was £1,312 million (31 March 2009: £1,635 million).
Taxation
The effective tax rate was 0.6% (2009: 26.5%). This rate was lower than our weighted average statutory tax rate principally due to the impact of the agreement of the German write down losses (see note 6 to the consolidated financial statements) and also the ongoing benefits from our internal capital structure.
Income tax expense includes a credit of £2,103 million arising from the German tax authorities’ decision that €15 billion of losses booked by a German subsidiary in 2001 are tax deductible. The credit includes benefits claimed in respect of prior years as well as the recognition of a deferred tax asset for the potential use of losses in future tax years.
Earnings per share
Adjusted earnings per share decreased by 6.2% to 16.11 pence for the year ended 31 March 2010 due the prior year tax benefit discussed under the heading "Taxation" here. Basic earnings per share increased to 16.44 pence primarily due to the impairment losses of £5,900 million in relation to Spain, Turkey and Ghana in the prior year compared to net impairment losses of £2,100 million in the current year and the income tax credit arising from the German tax settlement discussed above.
| 2010 £m | 2009 £m |
|
|---|---|---|
| Profit attributable to equity shareholders | 8,645 | 3,078 |
| Pre-tax adjustments: | ||
| Impairment losses, net | 2,100 | 5,900 |
| Other income and expense | (114) | – |
| Non-operating income and expense | 10 | 44 |
| Investment income and financing costs(1) | (106) | 335 |
| 1,890 | 6,279 | |
| Taxation | (2,064) | (300) |
| Adjusted profit attributable to equity shareholders | 8,471 | 9,057 |
| Weighted average number of shares outstanding | Million | Million |
| Basic | 52,595 | 52,737 |
| Diluted | 52,849 | 52,969 |
- Note:
- (1)
- See above notes 1 and 2 in “Net financing costs”.
Europe(1)
| Germany £m | Italy £m | Spain £m | UK £m | Other £m | Eliminations £m | Europe £m | % change | ||
|---|---|---|---|---|---|---|---|---|---|
| £ | Organic | ||||||||
| Year ended 31 March 2010 | |||||||||
| Revenue | 8,008 | 6,027 | 5,713 | 5,025 | 5,354 | (249) | 29,878 | 0.8 | (4.1) |
| Service revenue | 7,722 | 5,780 | 5,298 | 4,711 | 5,046 | (247) | 28,310 | 1.5 | (3.5) |
| EBITDA | 3,122 | 2,843 | 1,956 | 1,141 | 1,865 | – | 10,927 | (2.0) | (7.3) |
| Adjusted operating profit | 1,695 | 2,107 | 1,310 | 155 | 1,651 | – | 6,918 | (2.9) | (8.9) |
| EBITDA margin | 39.0% | 47.2% | 34.2% | 22.7% | 34.8% | 36.6% | |||
| Year ended 31 March 2009 | |||||||||
| Revenue | 7,847 | 5,547 | 5,812 | 5,392 | 5,329 | (293) | 29,634 | ||
| Service revenue | 7,535 | 5,347 | 5,356 | 4,912 | 5,029 | (293) | 27,886 | ||
| EBITDA | 3,225 | 2,565 | 2,034 | 1,368 | 1,957 | – | 11,149 | ||
| Adjusted operating profit | 1,835 | 1,839 | 1,421 | 328 | 1,702 | – | 7,125 | ||
| EBITDA margin | 41.1% | 46.2% | 35.0% | 25.4% | 36.7% | 37.6% | |||
- Note:
- (1)
- The Group revised how it determines and discloses segmental EBITDA and adjusted operating profit during the year. See note 3 to the consolidated financial statements.
Revenue increased by 0.8% benefiting from exchange rate movements. On an organic basis service revenue declined by 3.5%(*) reflecting reductions in most markets partially offset by growth in Italy and the Netherlands. The decline was primarily driven by reduced voice revenue resulting from continued market and regulatory pressure on pricing and slower usage growth as a result of the challenging economic climate. This was partially offset by growth in data and fixed line revenue.
EBITDA decreased by 2.0% resulting from an organic decline partially offset by a positive contribution from foreign exchange rate movements. On an organic basis, EBITDA decreased by 7.3%(*) resulting from a decline in organic service revenue in most markets and increased customer investment partially offset by operating and direct cost savings. The EBITDA margin declined 1.0 percentage point.
| Organic change % | M&A activity pps | Foreign exchange pps | Reported change % |
|
|---|---|---|---|---|
| Revenue – Europe | (4.1) | 0.1 | 4.8 | 0.8 |
| Service revenue | ||||
| Germany | (3.5) | – | 6.0 | 2.5 |
| Italy | 1.9 | – | 6.2 | 8.1 |
| Spain | (7.0) | – | 5.9 | (1.1) |
| UK | (4.7) | 0.6 | – | (4.1) |
| Other | (5.4) | – | 5.7 | 0.3 |
| Europe | (3.5) | 0.1 | 4.9 | 1.5 |
| EBITDA | ||||
| Germany | (8.9) | – | 5.7 | (3.2) |
| Italy | 4.3 | – | 6.5 | 10.8 |
| Spain | (9.9) | – | 6.1 | (3.8) |
| UK | (17.7) | 1.1 | – | (16.6) |
| Other | (10.2) | – | 5.5 | (4.7) |
| Europe | (7.3) | 0.1 | 5.2 | (2.0) |
| Adjusted operating profit | ||||
| Germany | (13.2) | (0.1) | 5.7 | (7.6) |
| Italy | 7.8 | – | 6.8 | 14.6 |
| Spain | (13.8) | – | 6.0 | (7.8) |
| UK | (58.3) | 5.6 | – | (52.7) |
| Other | (9.3) | 0.2 | 6.1 | (3.0) |
| Europe | (8.9) | 0.2 | 5.8 | (2.9) |
Germany
Service revenue declined by 3.5%(*) driven by a 5.0%(*) reduction in mobile revenue partly offset by a 1.3%(*) improvement in fixed line revenue. The mobile revenue decline was driven by a decrease in voice revenue impacted by a termination rate cut effective from April 2009, reduced roaming, competitive pressure and continued tariff optimisation by customers. The service revenue decline in the fourth quarter slowed to 1.6%(*) with mobile revenue declining 1.8%(*) driven by the acceleration in data growth and improved usage trends. Data revenue benefited from an increase in Superflat Internet tariff penetration to over 500,000 customers, a 46% increase in smartphones and an 85% increase in active Vodafone Mobile Connect cards compared with the previous year.
Fixed line revenue growth of 1.3%(*) was supported by a 0.4 million increase in fixed broadband customers to 3.5 million at 31 March 2010 and a 0.2 million increase in wholesale fixed broadband customers to 0.4 million at 31 March 2010.
EBITDA declined by 8.9%(*) driven by lower service revenue and investment in customer acquisition and retention offset in part by lower interconnect costs and a reduction of operating expenses principally from fixed and mobile integration synergies.
Italy
Service revenue growth was 1.9%(*) with strong growth in data revenue, driven by higher penetration of PC connectivity devices and mobile internet services, and fixed revenue. The continued success of dual branding led to a closing fixed broadband customer base of 1.3 million on a 100% basis. Increased regulatory, economic and competitive pressures led to the fall in voice revenue partially mitigated through initiatives to stimulate customer spending and the continued growth in high value contract customers. Mobile contract customer additions were strong both in consumer and enterprise segments and the closing contract customer base was up by 14.5%.
EBITDA increased by 4.3%(*) and EBITDA margin increased by 1.0 percentage point as a result of increased revenue, continued operational efficiencies and cost control.
Spain
Full year service revenue declined by 7.0%(*) primarily due to a decline in voice revenue which was driven by continued intense competition and economic weakness, including high unemployment, termination rate cuts effective from April and October 2009 and increased involuntary churn. In the fourth quarter the service revenue decline improved to 6.2%(*) as voice usage increased due to further penetration of our flat rate tariffs and fixed line revenue continued to grow with 0.6 million fixed broadband customers by the end of the financial year.
EBITDA declined 9.9%(*) and the EBITDA margin decreased by 0.8 percentage points as the decline in service revenue, the increase in commercial costs and the dilutive effect of lower margin fixed line services more than offset the reduction in overhead costs.
UK
Service revenue declined by 4.7%(*) with lower voice revenue primarily due to a mobile termination rate reduction effective from July 2009, continued intense competition and economic pressures resulting in customers optimising bundle usage and lower roaming revenue. These were partially offset by higher messaging revenue, strong growth in data revenue driven by the success of mobile internet bundles and higher wholesale revenue derived from existing MVNO agreements. The decline in the fourth quarter slowed to 2.6%(*) driven by higher data growth and the impact of mobile customer additions achieved through the launch of new products and expanded indirect distribution channels.
The 17.7%(*) decline in EBITDA was primarily due to lower service revenue and increased customer investment partially offset by cost efficiency initiatives, including streamlined processes, outsourcing and reductions in publicity and consultancy.
Other Europe
Service revenue decreased by 5.4%(*) with declines in all countries except the Netherlands as all markets were impacted by the economic downturn. In the Netherlands service revenue increased 3.0%(*) benefiting from strong growth in visitor revenue. Service revenue in Greece declined by 14.5%(*) primarily due to a mobile termination rate cut effective from January 2009, tariff changes and a particularly tough economic and competitive climate. Service revenue in Ireland declined due to a combination of recessionary and competitive factors. In Portugal there was a termination rate reduction effective from April 2009 which contributed to a fall in service revenue of 4.9%(*).
EBITDA declined by 10.2%(*). The EBITDA margin fell by 1.9 percentage points with declines in all markets except the Netherlands and Portugal. The decline in service revenue was partially offset by lower customer costs and a reduction in operating expenses.
The share of profit in SFR increased reflecting the foreign exchange benefits upon translation of the results into sterling.
Africa and Central Europe(1)
| Vodacom £m | Other £m | Africa and Central Europe £m | % change | ||
|---|---|---|---|---|---|
| £ | Organic(2) | ||||
| Year ended 31 March 2010 | |||||
| Revenue | 4,450 | 3,576 | 8,026 | 45.9 | (2.1) |
| Service revenue | 3,954 | 3,451 | 7,405 | 44.8 | (1.2) |
| EBITDA | 1,528 | 799 | 2,327 | 35.3 | (5.8) |
| Adjusted operating profit | 520 | 7 | 527 | (21.9) | (7.9) |
| EBITDA margin | 34.3% | 22.3% | 29.0% | ||
| Year ended 31 March 2009 | |||||
| Revenue | 1,778 | 3,723 | 5,501 | ||
| Service revenue | 1,548 | 3,565 | 5,113 | ||
| EBITDA | 606 | 1,114 | 1,720 | ||
| Adjusted operating profit | 373 | 302 | 675 | ||
| EBITDA margin | 34.1% | 29.9% | 31.3% | ||
- Notes:
- (1)
- The Group revised how it determines and discloses segmental EBITDA and adjusted operating profit during the year. See note 3 to the consolidated financial statements.
- (2)
- Organic growth includes Vodacom (except the results of Gateway) at the current level of ownership. See “Acquisitions” for further details.
Revenue increased by 45.9% benefiting from the treatment of Vodacom as a subsidiary and the full consolidation of its results from 18 May 2009 combined with a significant benefit from foreign exchange rate movements. On an organic basis service revenue declined by 1.2%(*), as the strong growth in Vodacom was offset by a challenging economic environment across Central Europe, mobile termination rate cuts and competition led pricing movements in Romania.
EBITDA increased by 35.3%, also benefiting from the full consolidation of Vodacom and positive foreign exchange rate movements. On an organic basis EBITDA decreased by 5.8%(*), with EBITDA margin decreasing due to turnaround investment in Turkey and Ghana and increased competition and the difficult economic environments across the region.
| Organic change % | M&A activity pps | Foreign exchange pps | Reported change % |
|
|---|---|---|---|---|
| Revenue | ||||
| Africa and Central Europe | (2.1) | 38.9 | 9.1 | 45.9 |
| Service revenue | ||||
| Vodacom | 4.6 | 112.0 | 38.8 | 155.4 |
| Other | (7.0) | 2.8 | 1.0 | (3.2) |
| Africa and Central Europe | (1.2) | 37.6 | 8.4 | 44.8 |
| EBITDA | ||||
| Vodacom | 10.4 | 101.8 | 39.9 | 152.1 |
| Other | (25.9) | (4.1) | 1.7 | (28.3) |
| Africa and Central Europe | (5.8) | 30.8 | 10.3 | 35.3 |
| Adjusted operating profit | ||||
| Vodacom | 12.5 | 3.1 | 23.8 | 39.4 |
| Other | (65.0) | (32.9) | 0.2 | (97.7) |
| Africa and Central Europe | (7.9) | (23.3) | 9.3 | (21.9) |
Vodacom
Service revenue grew by 4.6%(*) driven by a robust performance in South Africa offset by revenue declines in Tanzania and the Democratic Republic of Congo. Data revenue increased by 32.9%(*) driven by increased penetration of mobile broadband and higher mobile internet usage. The introduction of prepaid customer registration in South Africa negatively impacted customer growth in the year and mobile termination rate reductions are expected to reduce growth in the 2011 financial year, with the first reduction taking effect from 1 March 2010.
EBITDA increased by 10.4%(*) driven by the increase in service revenue and lower direct costs and regulatory fees in South Africa.
Other Africa and Central Europe
Service revenue declined by 7.0%(*) with Turkey’s return to growth in the second half of the year being more than offset by the decline in revenue across Central Europe. Service revenue in Turkey increased by 31.3%(*) in the fourth quarter driven by an improving trend in outgoing mobile revenue. The quality and mix of customers continued to improve, with Vodafone remaining the market leader in mobile number portability in Turkey. In Romania service revenue declined by 19.9%(*) due to intense competition throughout the year, mobile termination rate cuts and the continued impact on ARPU resulting from local currency devaluation against the euro, as tariffs are quoted in euros while household incomes are earned in local currency. In the Czech Republic, Hungary and Poland, the decline in service revenue was driven by mobile termination rate cuts which became effective during the year, impacting incoming mobile voice revenue. In the Czech Republic and Hungary challenging economic conditions also contributed to the decline in service revenue. Vodafone launched its 3G network services in the Czech Republic during the fourth quarter.
EBITDA decreased by 25.9%(*) mainly due to a reduction in service revenue coupled with turnaround investment in Turkey and Ghana. The significant service revenue growth in the second half of the financial year in Turkey was driven by investment and improvement in many areas of the business. These led to higher operating costs which, when coupled with increased interconnect costs arising from the introduction of new “any network” tariffs plans, resulted in negative EBITDA for the financial year. In Romania EBITDA decreased by 26.5%(*) due to the revenue decline but this was partially offset by strong cost reduction initiatives in all areas. Other Central European operations benefited from a continued focus on reducing costs to mitigate the impact of the revenue decline.
Asia Pacific and Middle East(1)
| India £m | Other £m | Elimi- nations £m | Asia Pacific and Middle East £m | % change | ||
|---|---|---|---|---|---|---|
| £ | Organic(2) | |||||
| Year ended 31 March 2010 | ||||||
| Revenue | 3,114 | 3,368 | (1) | 6,481 | 11.4 | 8.6 |
| Service revenue | 3,069 | 3,078 | (1) | 6,146 | 13.1 | 9.8 |
| EBITDA | 807 | 1,033 | – | 1,840 | 3.4 | 1.4 |
| Adjusted operating (loss)/profit | (37) | 395 | – | 358 | (35.6) | (25.9) |
| EBITDA margin | 25.9% | 30.7% | 28.4% | |||
| Year ended 31 March 2009 | ||||||
| Revenue | 2,689 | 3,131 | (1) | 5,819 | ||
| Service revenue | 2,604 | 2,831 | (1) | 5,434 | ||
| EBITDA | 717 | 1,062 | − | 1,779 | ||
| Adjusted operating (loss)/profit | (30) | 586 | − | 556 | ||
| EBITDA margin | 26.7% | 33.9% | 30.6% | |||
- Notes:
- (1)
- The Group revised how it determines and discloses segmental EBITDA and adjusted operating profit during the year. See note 3 to the consolidated financial statements.
- (2)
- Organic growth includes India but excludes Australia following the merger with Hutchison 3G Australia on 9 June 2009. See “Acquisitions” for further details.
Revenue increased by 11.4% including a 7.4 percentage point benefit from foreign exchange rate movements, offset in part by the impact of the creation of a joint venture in June 2009 between Vodafone Australia and Hutchison 3G Australia which is presented under the “M&A activity” column in the table below. On an organic basis service revenue increased by 9.8%(*) reflecting a 42.2% increase in the mobile customer base and continued strong data revenue growth partially offset by a decline in mobile voice pricing. India contributed around 88%(*) of the region’s organic service revenue growth.
EBITDA grew by 3.4% with a 6.4 percentage point positive contribution from foreign exchange rate movements, offset in part by the creation of the joint venture in Australia. On an organic basis EBITDA increased by 1.4%(*) with EBITDA margin decreasing by 2.2 percentage points primarily reflecting the competitive pricing environment in India and the impact of launching services in Qatar.
| Organic change % | M&A activity pps | Foreign exchange pps | Reported change % |
|
|---|---|---|---|---|
| Revenue | ||||
| Asia Pacific and Middle East | 8.6 | (4.6) | 7.4 | 11.4 |
| Service revenue | ||||
| India | 14.7 | – | 3.2 | 17.9 |
| Other | 2.9 | (4.5) | 10.3 | 8.7 |
| Asia Pacific and Middle East | 9.8 | (3.9) | 7.2 | 13.1 |
| EBITDA | ||||
| India | 9.2 | – | 3.4 | 12.6 |
| Other | (4.8) | (6.0) | 8.1 | (2.7) |
| Asia Pacific and Middle East | 1.4 | (4.4) | 6.4 | 3.4 |
| Adjusted operating profit | ||||
| India(1) | 30.7 | – | (7.4) | 23.3 |
| Other | (23.3) | (14.6) | 5.3 | (32.6) |
| Asia Pacific and Middle East | (25.9) | (15.2) | 5.5 | (35.6) |
- Note:
- (1)
- The percentage change represents the increase in the adjusted operating loss.
India
Service revenue grew by 14.7%(*) for the year, with fourth quarter growth of 6.5%(*) including a 0.3 percentage point(*) benefit from Indus Towers. The contribution to India’s revenue growth from Indus Towers for the fourth quarter was lower than in the third quarter as the fourth quarter represented the first anniversary of significant revenue being earned from the network sharing joint venture. Mobile service revenue growth was driven by the increase in the customer base, with record net additions for the quarter of 9.5 million, partially offset by ongoing competitive pressure on mobile voice pricing. Customer penetration in the Indian mobile market reached an estimated 50% at 31 March 2010 representing an increase of 16.0 percentage points compared to 31 March 2009.
EBITDA grew by 9.2%(*) driven by the increased customer base and the 37.6% increase in total mobile minute usage during the year, with costs decreasing as a percentage of service revenue despite the pressure on pricing. Network expansion continued with the addition of 9,000 base stations by Indus Towers and an additional 16,000 by Vodafone Essar.
Other Asia Pacific and Middle East
Service revenue increased by 2.9%(*) driven by the performance of Egypt and Qatar. In Egypt service revenue grew by 1.3%(*) as pressure on voice pricing and a 1.0% impact of retrospective mobile termination rate reductions introduced in the fourth quarter was offset by 31% growth in the average customer base and 64.2%(*) growth in data and fixed line revenue, with data driven by increased penetration of mobile internet devices. Having launched services in July 2009, Qatar increased its mobile customer base to 465,000 customers at 31 March 2010, representing 28% of the total population.
EBITDA declined 4.8%(*) with a similar decline in EBITDA margin due to pricing, recessionary pressures and the impact of start-up costs in Qatar offset in part by efficiency savings.
On 9 June 2009 Vodafone Australia successfully completed its merger with Hutchison 3G Australia to form a 50:50 joint venture, Vodafone Hutchison Australia Pty Limited. Since the merger the joint venture has performed well delivering 8% pro-forma service revenue growth in the fourth quarter and cost synergies to date of £65 million, in line with management’s expectations.
Verizon Wireless(1)
| 2010 £m | 2009 £m | % change | ||
|---|---|---|---|---|
| £ | Organic | |||
| Revenue | 17,222 | 14,085 | 22.3 | 5.0 |
| Service revenue | 15,898 | 12,862 | 23.6 | 6.3 |
| EBITDA | 6,689 | 5,543 | 20.7 | 4.4 |
| Interest | (298) | (217) | 37.3 | |
| Tax(2) | (205) | (198) | 3.5 | |
| Non-controlling interests | (80) | (78) | 2.6 | |
| Discontinued operations | 93 | 57 | 63.2 | |
| Group’s share of result in Verizon Wireless | 4,112 | 3,542 | 16.1 | 8.0 |
- Notes:
- (1)
- All amounts represent the Group’s share unless otherwise stated.
- (2)
- The Group’s share of the tax attributable to Verizon Wireless relates only to the corporate entities held by the Verizon Wireless partnership and certain state taxes which are levied on the partnership. The tax attributable to the Group’s share of the partnership’s pre-tax profit is included within the Group tax charge.
In the United States Verizon Wireless reported 6.2 million net mobile customer additions bringing its closing mobile customer base to 92.8 million, up 7.2%. Customer growth reflected recent market trends towards the prepaid segment alongside market leading customer churn.
Service revenue growth of 6.3%(*) was driven by the expanding customer base and robust data revenue derived from growth in multimedia handsets and smartphones.
The EBITDA margin remained strong despite the tougher competitive and economic environment. Efficiencies in operating expenses have been partly offset by a higher level of customer acquisition and retention costs, particularly for high-end devices including smartphones.
The integration of the recently acquired Alltel business is going according to plan. Store rebranding is complete and network conversions are well underway and on track. As part of the regulatory approval for the Alltel acquisition, Verizon Wireless is required to divest overlapping properties in 105 markets. On 26 April 2010 Verizon Wireless completed the sale of network and licence assets in 26 markets, corresponding to 0.9 million customers, to Atlantic Tele-Network for US$0.2 billion. Verizon Wireless has agreed to sell the network assets and mobile licences in the remaining 79 markets, corresponding to approximately 1.5 million customers, to AT&T for US$2.4 billion. This transaction remains subject to receipt of regulatory approval and is expected to complete by 30 June 2010.
© Copyright Vodafone 2010
