Vodafone Customer Growth Tops Forecasts
By Richard Baum
LONDON (Reuters) - Vodafone Group Plc announced stronger than expected subscriber figures Wednesday as growth in its three main European markets accelerated in the third quarter.
But its shares showed little reaction to the news amid questions over whether Vodafone was sacrificing profits for market share by heavily subsidizing handset costs.
The world's largest mobile phone operator said it added 6.16 million customers in the last three months, down from 6.6 million in the second quarter because of a slowdown in U.S. growth.
The figure, which was above analysts' consensus forecast of 5.7 million, took its total customer base worldwide to 65.75 million.
``With the traditional increased number of net additions in the Christmas quarter, we could well achieve 50 percent growth for the fourth year running,'' Chief Executive Chris Gent said in a statement.
But Jerry Dellis, an analyst at Bear Stearns, said it was unclear how much of the growth was due to Vodafone subsidizing handset prices.
``The figures are good on the face of it but what we need to understand is whether the growth is profitable,'' he said. ``You can see when go into the shops (in Britain) that you can pick up a handset cheaper on a Vodafone tariff that on, say, an Orange tariff.''
Vodafone shares were unchanged on the day at 251.5 pence after the figures, which came as the company said it was investing $2.5 billion for a stake in China Mobile (Hong Kong).
Vodafone said it had its strongest quarter in the UK for nearly two years, signing up 877,000 customers after a disappointing 572,000 additions in the previous three months. Analysts had expected only 811,000.
Its German business D2 added 2.73 million customers compared with 2.68 million in the previous quarter, while Omnitel in Italy lifted growth to 815,000 from 706,000.
U.S. subscriber growth fell to 344,000 from 1.05 million in the second quarter after adjustments relating to the reduction of Vodafone's stake in Verizon Wireless following a merger with other U.S. wireless operators.
Mobile companies subsidize the cost of handsets in the expectation that they will more than recoup the money through call charges. |
