Vodafone predicts revenue growth despite India

18th May 2010 07:04

Mobile giant Vodafone expects to see revenues in its core business grow in the current year despite problems in India where growing competition prompted a £2.3bn impairment charge."We are creating a stronger Vodafone, which is positioned to return to revenue growth during the 2011 financial year, as economic recovery should benefit our key markets," chief executive Vittorio Colao said.Turnover in the year to March rose by 8.4% to £44.5bn, but on an organic basis fell by 2.3%, though demand for data and fixed broadband saw that figure improve to a decline of 0.2% in the last three months of the year. Customer numbers increased to 341m, with 8.5m net additions in the past three months.Operating profit came in at £11.5bn, down from £11.8bn but in line with its recent guidance. Pre-tax profits doubled £8.7bn compared with £4.2bn last time due to lower one-off costs.Profits were struck after the £2.3bn impairment charge in India following the introduction of six new mobile licences, which have sparked "intense price competition".Vodafone is also bidding for a new 3G licence, where the costs of the auction are soaring and have reached £2.45bn for each licence, nearly double forecasts. There is also talk of an additional levy on existing licence holders.Speaking to reporters, Colao said "I don't think these rules (on consolidation and spectrum) make sense. India needs investment. India is a vast country with a vast population still not fully able to communicate. What India needs is investment and good technology and this will not come in an environment with too many operators and fragmentation of investment." Vodafone's Asia Pacific and Middle East service revenue increased by 9.8% to £6.1bn, though fourth quarter service revenue increased by 5.0%, lower than the previous quarter as the competition in India bit. Earlier, Colao's statement with the results had been more upbeat. "Vodafone's financial results exceeded our upgraded guidance on all measures. Revenue trends have improved again in Q4 driven by growth in mobile data and fixed broadband. Cost reduction targets were delivered ahead of schedule enabling commercial reinvestment to improve market share and further strengthen our technology platforms," he said.Europe service revenue declined 3.5% to £28.3bn. In the fourth quarter, service revenue declined 1.7%, an improvement on the third quarter with strong revenue growth in data and fixed broadband.Africa and Central Europe service revenue declined 1.2% to £7.4bn. In the fourth quarter, service revenue increased by 2.4%.For the current year, Vodafone expects operating profit in a range of £11.2bn - £12bn and cashflow of £6.5bn. The mobile giant also promised dividend per share of no less than 7% "for the next three financial years." Total dividends per share will be 10.18p per share for the 2013 financial year, it added. This year's dividend was 8.31p, a rise of 7%.