LONDON (Alliance News) - Vodafone Group PLC confirmed its full-year profit guidance Tuesday, as it swung to a pretax profit in the half year ended September 30.
The company also raised its interim dividend and set out details for its Project Spring investment programme, originally announced when Vodafone sold its 45% interest in US joint venture Verizon Wireless for USD130 billion in September.
The mobile telecommunications giant swung to a pretax profit of GBP1.5 billion in the recent six months from a pretax loss of GBP3.9 billion in the same period the previous year. It posted revenue of GBP19.1 billion, up from GBP18.6 billion in the previous year.
Strong growth in emerging markets were offset by regulatory changes and challenging conditions in Europe, as pricing came under competitive pressure, Vodafone said.
Earnings before interest, tax, depreciation and amortisation was GBP6.6 billion, down from GBP6.7 billion in the previous year.
Vodafone proposed an interim dividend of 3.53 pence each, up 8.0% from GBP3.37 pence, while stating its intention to pay a full-year dividend of 11 pence.
Vodafone said it expects to deliver full-year adjusted operating profit of around GBP5 billion, with free cash flow between GBP4.5 billion and GBP5 billion.
The company also gave details of its Project Spring investment plan, through which it plans to invest GBP7 billion over the next two financial years. Vodafone cautioned that this would hamper EBITDA by around GBP600 million in 2015 due to higher operating expenses, but would have a neutral impact on EBITDA by 2017.
The project includes investments of GBP3 billion in Europe to deliver deeper 3G coverage and capacity, as well as accelerating its 4G network build. In Africa, the Middle East and Asia-Pacific region, Vodafone will invest GBP1.5 billion to extend 3G coverage across major cities and key regions. It will also invest around GBP1 billion in unified communications, Vodafone said.
Additionally Vodafone will invest GBP500 million into its enterprise product suite, and GBP1 billion into enhancing customer experience, Vodafone said.
"Whilst trading conditions in Europe remain very tough at present, we are encouraged by the forecast return to economic growth over the next two years and the potential for a shift in regulatory focus to support greater industry investment and consolidation," said Chief Executive Vittorio Colao in a statement.
"Our Project Spring organic investment programme - now increased to GBP7 billion - will accelerate further our plans to establish stronger network and service differentiation for our customers."
In early trading Tuesday, Vodafone was quoted at 227.25 pence per share, down 0.10p.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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