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| Edited By: |Source: Reuters |Updated: Mar 17, 2018, 02:52 AM IST
Vodafone Group Plc raised its outlook on Thursday after posting third-quarter revenue ahead of forecasts due to cost cuts and an improving picture in Europe. Competition in India however remained fierce.
Analysts said the improved trading in Europe and particularly the turnaround in Turkey should boost sentiment after fears that the recent revenue weakness was more structural than cyclical.
Vodafone was the first major European telcoms carrier to report in this quarter and the news sent its shares up 4 percent at 139.8 pence at 0945 GMT, to top the FTSE gainers' list.
"Vodafone results can often feel like a game of dodgems," Bernstein analyst Robin Bienenstock said. "There are bright spots, but these are often overshadowed by some peripheral business blowing up (for example Turkey) or huge currency swings that muddy the waters.
"This set of results is free of torpedoes and brings signs of cyclical recovery." Vodafone said it now saw adjusted operating profit for 2010 in the upper end of its forecast range due to lower depreciation and amortisation.
It also lifted its free cash flow range by 0.5 billion pounds ($799.5 million) after an improvement in working capital and timing effects, which Collins Stewart noted was unrepeatable.
Vodafone said its improved trading followed growth in Italy and improving trends in Britain and Germany, while Spain stabilised. Turkey, which has undergone a turnaround programme, returned to growth with a 12.9 percent rise in service revenue.
Overall organic service revenue in Europe, which has been hit by the economic downturn and a market saturation, was down 3.2 percent, compared with a 4.5 percent fall in the first half and an analyst poll forecast for Reuters of a 4.1 percent drop.
The European market was boosted by increased text messaging, a 10 percent increase in fixed-line revenues, good data revenue growth and a noticeable improvement in roaming activity from business customers.
INDIA ON HOLD
Competition in India however remained fierce. Vodafone, which entered India as part of its high-profile push into emerging markets, has managed to maintain strong customer growth in the country but a fierce pricing war and the push into more rural areas has hit margins.
Bharti Airtel, India's top mobile operator, said in January it had recorded its slowest profit growth in more than three years as the price war and entry of global players overshadowed subscriber growth in the world's fastest growing market.
The entry of operators including Japan''s NTT DoCoMo and Russian Sistema has pummelled call rates to as low as 0.7 US cents per minutes in a 13-operator industry signing up over 14 million users each month.
Vodafone said it had increased service revenue in that market 13.8 percent, but the growth rate was lower than the previous three months.
"(We are seeing) good results with our cost reduction and cash flow generation and a third quarter which was an improvement on the previous one," chief executive Vittorio Colao told reporters. "We are on track to deliver on our strategic priorities in the current financial year."
For the group, Vodafone posted a 10.3 percent rise in third-quarter revenue to 11.5 billion pounds, compared with a Reuters poll of 11.4 billion pounds, and said it had a proportionate mobile customer base of 333 million with 10.3 million net additions in the quarter.
The outlook ranges for the 2010 financial year included full-year foreign exchange assumptions of 1 pound to 1.12 euros and 1 pound to $1.50.
The actual rates experienced during the first three quarters of the 2010 financial year were 1 pound to 1.13 euros and 1 pound $1.61.
