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LONDON (Alliance News) - Vodafone Group PLC confirmed Thursday its full-year earnings guidance as it said a decline in its service revenue slowed to 0.4% year-on-year in its third quarter, and said its GBP19 billion investment programme dubbed Project Spring is "well advanced".
The company continues to expect to post full-year earnings before interest, tax, depreciation and amortisation of GBP11.6 billion to GBP11.9 billion, and it expects to be free cash flow positive after all capital expenditure. In the year to end-March 2014 the company posted Ebitda excluding restructuring costs of GBP12.83 billion.
Vodafone's guidance excludes its acquisition of Grupo Corporativo Ono SA, which it acquired in a EUR7.2 billion deal last March.
Vodafone posted a 0.4% decline in its group service revenue to GBP9.79 billion for the quarter to end-December on an organic basis, which in the case of Vodafone is its performance on a comparable basis including merger and acquisition activity and real exchange rates. This compared with a 1.5% decline in its second quarter.
In Europe organic service revenue fell 2.7% in the quarter, compared with a 5.0% fall in the second quarter, as customers took up 4G services, driving up data usage. Vodafone said it now has 10.1 million 4G customers in Europe. Total revenue in Europe was up 19.9% compared with the previous year, boosted by acquisitions which offset a hit from foreign exchange movements.
In Africa, the Middle East and Asia Pacific organic service revenue was up 5.9%, bolstered by strong customer growth and increased use of voice and data services, although this growth was down from 6.8% growth in its second quarter. Total revenue in the region was up 6.8%, helped by foreign exchange movements.
It said it had made strong progress on Project Spring, with Vodafone's mobile build plans now 50% complete. In fixed line it deployed its high speed network technology over a further 700,000 householders in the quarter. The company said it is seeing improvements in its network coverage and quality as a result of its investments, with European 4G coverage up to 65% from 38% coverage a year ago.
Integration of acquisitions Kabel Deutschland Holding GmbH and Ono are on track, Vodafone said, with synergies in line with expectations.
Vodafone said that demand for mobile data has continued to accelerate, with total traffic over its network up 84% compared with the previous year. It now has 4G services available in 18 markets.
Vodafone expressed confidence that over time its investment will translate into "further improvements in customer perception, average revenue per user and churn."
Shares in Vodafone are trading down 0.5% at 235.40 pence Thursday morning.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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