Vodafone claims that its strategic focus on smartphones and mobile data is reaping rewards and, despite a 7.8 per cent drop in annual profit, reiterates its ability to meet forecasts based largely on data growth. However, the company's ability to deliver will in part depend on its ability to reset mobile data prices.
Vodafone reported group full-year revenue growth of 3.2 percent, taking its total revenue to £45.9 billion for the year ending March 31. Within this, data revenues grew 26.4 per cent overall, while smartphone penetration in Europe rose from 11.6 per cent to 18.7 per cent year-on-year. With a year- end total of £5.1 billion, mobile data now represents 12.0% of the Group's service revenue. In Europe specifically, Vodafone claims that 48 per cent of its smartphone customers are now taking some form of data plan.
Vodafone CEO, Vittorio Colao said in a statement: "We are successfully growing data revenue by moving away from 'all-you-can-eat' packages to tiered data pricing."
The ability to take what Richard Kramer, managing director at independent financial analyst group Arete Research, described to delegates at the New Digital Economics conference in London last week as a 'one-time-only opportunity to reset the price of data,' is key to the short and medium term success of Europe's operators.
According to Reuters, Vodafone's upbeat tone has caught investors by surprise and has set itself apart from the warnings issued by Dutch company KPN and Belgian group Belgacom, which both cut their outlooks, citing weak domestic demand and intense competition.
To protect its revenue stream from mobile data, KPN has announced intentions to charge based on specific services and applications, beginning with Skype and WhatsApp. While TelecomPaper reports that Dutch government has decided that this is acceptable, the proposals have caused uproar amongst consumer groups and consternation from industry analysts who question both the business sense of this and its practicality. Disruptive Analysis's Dean Bubley described the plans as deeply flawed, citing simple mash-ups and VPN tunnels as obvious workarounds.
Vodafone's tiered approach is much simpler and reaping the required rewards based on the last year's results. According to Bernstein analyst Robin Bienenstock, cited by Reuters, "Vodafone's historic performance as a serial under-performer versus peers appears to be a thing of the past." He further stated that Vodafone is now outperforming competitors in practically every major market in Europe.
While this may be the case in Northern Europe, economic difficulties across Southern Europe have continued to impact on all operators in these markets and Vodafone has not escaped unscathed. Vodafone stated that £6.15 billion write-downs on the value of its operations in five countries--Spain, Italy, Ireland, Greece and Portugal--contributed to its drop in full-year profit.
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