Ovum Comment: Steady performance for Vodafone

Vodafone released its key performance indicators (KPIs) for the quarter ending December 2006. Highlights included: Organic growth of 6.1% for the quarter in proportionate mobile revenue, with proportionate growth of 0.9% in Europe and 14.4% in EMAPA; 8.7 million proportionate organic net mobile additions for the quarter, with the total proportionate mobile customer base at 198.6 million at the end of the quarter; and 2.5 million 3G devices added, bringing the total 3G device base to 13.6 million.

Ovum principal analyst John Delaney comments:

There are no big surprises in these numbers and Vodafone is probably happy about that; big surprises in KPIs tend to be unpleasant ones. Customer growth is higher than the consensus of expectation, and revenue growth is within Vodafone's guidance range (5.0-6.5%). The geographical distribution tells the same story that underpins the company's often-stated strategic direction: avoiding decline in the saturated market of Western Europe, increasing the contribution to growth from markets in the EMAPA division.

In Western Europe, the trick remains one of balancing short-term downward fluctuations in some markets with short-term upward fluctuations in others. Probably the most striking numbers here are strong net customer additions in the Italian and German markets, up by 792,000 and 709,000 respectively. Meanwhile, growth in revenue from new services (i.e. other than voice and SMS) continues steadily, albeit slowly, reaching 5.3% of total service revenues.

In EMAPA, Vodafone's portfolio of assets continues to perform solidly as the engine of growth in customer numbers, especially in Egypt and Turkey. However, the future performance of this division depends much more heavily at present on the outcome of the battle for control of Hutchison Essar in India. That remains a very difficult one to call.

John Delaney is a principal analyst in Ovum's Consumer Group.


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