Vodafone Ireland’s revenues dip below €1bn

Vodafone Ireland's revenues dipped below the €1 billion mark in the full year to the end of March, as its growing fixed-line revenues struggled to plug a gap from falling network rates.

The global mobile group’s annual results reveal that its Irish unit had total revenues of €996 million in the year, down slightly from just over €1 billion the prior year.

Its earnings before non-operational itsems such as tax and interest grew slightly to €232 million

While revenues at the Irish unit are higher than Vodafone’s other small-sized European operations - Portugal and Greece - earnings at the Irish unit are lower, as the mobile industry here grapples with stiff competition and cuts in regulatory mobile termination rates (MTRs).

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Vodafone says its “service revenues” in Ireland were flat while they grew by 2 per cent excluding the impact of lower MTRs. Fixed-line growth is supporting its financial performance in the face of a less buoyant mobile market.

Service revenues fell 1.2 per cent in the fourth quarter, suggesting things got tougher in the months since Christmas.

Overall in its last financial year, Vodafone Ireland made an operating profit of €55 million. The wider group reported a loss of €6.1 billion after trouble at its Indian operation.

Anne O’Leary, the chief executive of Vodafone Ireland, which has 1.95 million customers, said it made “operational progress” oin the rollout of fibre services.

It recorded 8.8 per cent growth in its fixed-broadband base. Data usage by its customers also grew strongly as customers accessed more content-rich online services.

In March, Vodafone Ireland said it would invest a further €500 million in its infrastructure here over the next three years.

Ireland holds the largest number of small shareholders in the company as part of the legacy of an initial investment in Telecom Éireann dating back to 1999.

Investors were last year given the opportunity to avail of a special service to allow them to sell their stock at a low cost, or even for free.

Seeking to reassure investors about the future on Tuesday, the group forecast growth in earnings and a jump in free cash flow for the current year, driven by stabilising average revenue from its contract customers and lower spending.

It predicted a rise in organic adjusted core earnings growth of between 4 and 8 per cent and free cash flow of about €5 billion, up from €4.1 billion in the previous year.

“We expect to sustain our momentum in the coming financial year, generating free cash flow of around €5 billion,” chief executive Vittorio Colao said on Tuesday.

“Our confidence in the outlook is demonstrated by another 2 per cent increase in our dividend.”

The forecast growth in free cash flow this year, which will come as the company reduces investment in its network following its Project Spring upgrade, is ahead of analysts’ predictions of €4.66 billion.

Vodafone's organic service revenue growth slowed to 1.5 per cent in the final quarter from 2.1 per cent in the third, due to regulatory headwinds in Europe that analysts say will ease in the year ahead.

(Additional reporting: Reuters)