Vodafone Irish revenues rise as broadband gains offset mobile dip

Phone giant Vodafone reported an increase in service revenue in Ireland in the first half of its financial year, as growth in fixed broadband customers and mobile data usage offset a decline in handset subscribers.

Service revenue in Ireland rose by 1.6 per cent to €484 million, the company reported on Tuesday as the wider group posted a better-than-expected 4.3 per cent rise in core earnings in the first half of the year, helped by improving trading in big European markets such as Germany and Italy.

The number of Irish fixed broadband customers rose by 10,000 to 257,000 during the company’s second quarter to the end of September. However, mobile subscribers dipped by 2,000 to 1.965 million, continuing a decline that saw mobile customers fall below two million last year for the first time in more than a decade.

Usage

However, mobile data usage rose at an annual 37 per cent rate in the second quarter as customers take advantage of the company’s enhanced fourth-generation (4G) network. Vodafone Ireland now has over a million 4G customers.

Meanwhile, Vodafone envisages its Siro broadband joint venture with ESB, which began to roll out a fibre-to-the-home network late last year, having connections set up to more than 65,000 households by the end of this year.

“We have invested €550 million over a three-year period” on technology in Ireland, Vodafone Ireland chief executive Anne O’Leary said, adding that the company plans to invest over €250 million in the current financial year in its network and information technology transformation programme.

While the world’s second biggest mobile operator did not disclose quarterly Irish earnings figures, the group reported earnings before interest, tax, depreciation and amortisation of €7.9 billion, beating a €7.8 billion consensus forecast. Organic service revenue was up 2.4 per cent in the second-quarter, unexpectedly ahead of the 2.2 per cent recorded in the first quarter and ahead of consensus, it said on Tuesday.

Earnings

Vodafone slightly lowered the top of its range for full-year earnings to €15.7 to €16.1 billion. The top limit was previously €16.2 billion. Chief executive Vittorio Colao said the improvement in Europe was "modestly ahead" of expectations, led by Germany and Italy, and the group had executed its strategy well in emerging markets, although competition in India had increased.

“We expect to sustain our underlying performance in the second half of the year and remain on track to meet our full-year objectives despite macroeconomic uncertainties,” he said.

However, the telecoms giant posted a first-half net loss of €5 billion after writing down the value of its Indian business by the same amount due to a price war sparked by a powerful new rival.

The three biggest players in the Indian market, leader Bharti Airtel, Vodafone and number three player Idea Cellular , are being challenged by new entrant Reliance Jio Infocomm, backed by India's richest businessman Mukesh Ambani.

Jio made an immediate impact with the launch of free calls and cut-price data services in September. Mr Colao said Jio’s free trials were “unprecedented” and Vodafone was watching carefully to see that the promotions were limited to 90 days, as required by the regulator.

Vodafone has been looking to spin off its Indian business but said on Tuesday it would now wait for market conditions to stabilise before listing Vodafone India's shares. This would not happen before the end of next March, it said. "It's our intention to IPO as soon as market conditions improve in India," chief financial officer Nick Read said.

– Additional reporting: Reuters