Interim Results 11/98
VODAFONE: International growth boosts results
By Jane Croft
Vodafone, the UK mobile phone company, today said that strong growth in its international markets and an increase in customers using its pre-pay service helped it report a 60 per cent increase in pre-tax profits to £476.9m ($798.6m) in the half year to September 30, from £297.5m.
The international division now contributes a third of operating profit with £157.7m, compared to £42.9m. It was helped by the Australian operations which broke even for the first time in August and 44 per cent growth in Europe, including Greece where it owns 55 per cent of Panafon. Both the Netherlands and France were now in profit. There was also a £65m exceptional gain from the sale of its interest in Globalstar, the telecommunications partnership.
The group reported an increase of 1.5m customers to a worldwide customer base to 7.3m. It expects total market penetration to reach 50 per cent by 2003 which is a year earlier than it projected last year.
Chris Gent, chief executive, said: "This half year for the Vodafone Group has been marked by accelerating customer growth in all of our markets around the world."
He said of future acquisitions: "We have lots of plans and yes we've taken on increased holdings in a number of entities and in New Zealand and we hope you'll see more of the same in the next couple of years." However he said that although Vodafone was looking at US expansion, it was not in talks with Airtouch, the US communications company, about a possible alliance or merger.
Group turnover was £1.56bn up from £1.16bn in the same period last year and the strong profits pushed the shares up slightly by 3p to 854p after the results were published mid-afternoon.
In the UK Vodafone offset the impact of tariff reductions by recording more usage and operating profit was flat at £283m compared to £302m last year. The churn rate has been reduced to 26.2 per cent, compared to 29.9 per cent for the same period last year.
Vodafone also said there was a large increase in the use of its 'Pay As You Talk' service, which had 419,000 customers at the end of September, compared to 51,000 a year earlier. Mr Gent said: "This is a good business as we have no bad debt and no cost to manage these customers."
The interim dividend was 3.12p, up from 2.71p, payable from earnings per share of 10.8p, compared to 6.23p.
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