Profit Climbs at Vodafone, While Revenue Slips
Vodafone Group’s £19 billion or $27.4 billion bet is beginning to finally pay off.
Vodafone, the second largest worldwide mobile carrier trailing only China Mobile, posted on Tuesday its first organic growth for the full year in both its revenue and its core earnings in 8 years.
The company, based in the UK, said it would finally be reaping the benefits from the Project Spring it completed recently that took two-years. The effort that cost £19 billion is to expand and improve its overall network.
The UK mobile operator announced that its revenue for its March ending fiscal year was £41 billion, which was down 3% compared with last year, but in line with expectations of analysts.
Vodafone has attributed the drop to movements in foreign exchange and said growth in organic revenue, which excludes an impact of foreign exchange reached 2.3%.
Vodafone’s earnings for the full year prior to interest, taxes, amortization and depreciation reached £11.6 billion, which also was in line with expectations of analysts.
The mobile carrier said that the figure was 2.5% lower than the year before due to foreign exchange fluctuations and that its organic growth reached 2.7%.
The company posted a loss for the full year of £3.8 billion in comparison to a £5.9 billion profit for the previous year.
Markets applauded Vodafone’s growth, sending its shares up by 2.4% in trading during midday in London.
Vodafone’s CEO Vittorio Colao called the year one of strong execution during a conference call with analysts.
Vodafone announced its Project Spring back in September of 2013, while at the same time it announced it would sell its stake of 45% in Verizon Communications for over $130 billion.
The company announced it would invest over £19 billion between March of 2014 and March of 2016 to make improvements in its mobile networks as well as customer service, which subscribers at Vodafone have complained about regularly.
That paid off, in particular in Europe, where revenue at Vodafone increased by 0.5% organically during the fourth quarter.
Clients who want the best available service are willing more and more to pay premium prices for it, said an analyst with Morningstar.
At one time Vodafone focused on the selling of just mobile subscriptions, but has used Project Spring to add in fixed lines for broadband and cable television, especially through Germany.
Vodafone announced it added over 1.3 million broadband customers during its fiscal year and has a total of more than 13.4 million.