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* Maintains dividend after reduction previous year
* Full-year core earnings up 2.6%, in line with forecasts
* Roaming revenues plunge, but data revenues surge
* Shares up 8%
(Adds further CEO comments, analyst reaction, updates shares)
By Paul Sandle
LONDON, May 12 (Reuters) - Vodafone maintained its
dividend on Tuesday, bucking a corporate trend to cut or scrap
payouts due to the coronavirus crisis, as the world's
second-biggest mobile operator met expectations with a 2.6% rise
in full-year core earnings.
The British company said a drop in international travel due
to the virus pandemic hit revenues from roaming calls and it
expected customer spending to suffer from the economic downturn.
But it said data usage was surging and it was retaining more
customers thanks to the speed and reliability of its networks.
Chief Executive Nick Read said the company had delivered a
"rapid, comprehensive and coordinated" response to the crisis.
Core earnings reached 14.9 billion euros ($16.1 billion) in
the year ended March 31, with group revenue up 3% to 45.0
billion euros, driven by business in Europe.
Shares in the group, which have fallen 19% in the last 12
months, were up 8.2% to at 122.22 pence at 1000 GMT.
Read cut Vodafone's dividend a year ago, relieving immediate
pressure on its balance sheet.
This time, the group kept its full-year payout at 9.00 euro
cents a share. Rival BT Group suspended its dividend.
The Vodafone CEO said free cash flow grew 12.2% to 4.9
billion euros, enabling Vodafone to invest in its network and
pay the dividend that many of its shareholders relied upon.
Analysts at Jefferies said Vodafone had highlighted
shareholder distributions as a key strategic priority in future,
while giving a realistic assessment of COVID-19.
STICKING TO UK PLAN
Read said Vodafone would not change course in Britain after
two of its rivals, Liberty Global's Virgin Media and
Telefonica's O2, said they would merge in a challenge
to BT.
"We remain very focused on our organic strategy," he said.
"The market remains structurally favourable for us."
Vodafone was the main rival to BT in enterprise, he said,
and it made sense to keep buying wholesale capacity from other
providers for its consumer business.
"We are a challenger on the converged consumer side with the
capabilities and access to all the infrastructure we need," he
said, saying Britain had a different network structure and TV
revenue per user to Germany, where it bought Liberty's cable
assets last year.
Vodafone, which has 65 million mobile contract and 25
million broadband customers in Europe, said roaming in Europe
fell by 65% to 75% in April as the pandemic curbed travel.
The impact could be 500 million euros this year, it said.
Vodafone said some small business customers had requested
payment deferrals and some larger enterprise customers had
sought to delay projects.
However, the pandemic has boosted demand for data as
customers work from home and use technology to stay in contact
with friends and family.
Vodafone said mobile data had increased by 15% and
fixed-line usage by as much as 70% in some markets.
The rate of customer churn, or switching to rivals, fell 4-5
percentage points as mobile companies closed stores, Vodafone
said, adding that the rate of new gross consumer additions
reduced by around 40%.
The company said that, given uncertainties surrounding the
pandemic, it could not provide adjusted core earnings guidance
for the current financial year.
But it said that, based on an assessment of the global
economy, it could be flat to slightly down, compared with a
rebased 14.5 billion euros for 2019-20.
It did provide guidance for free cash flow before spectrum
costs, which underpins its dividend, saying it would be at least
5 billion euros.
($1 = 0.9253 euros)
(Editing by Kate Holton and Mark Potter)
