Vodafone announces Q4 results, revenue up slightly

Vodafone has announced its results for the fourth quarter and the full year running up until the end of March, with the company returning to growth in Q4 after over two years of consistently slumping back-to-back quarters.

The network said its organic service revenue climbed 0.1 per cent in Q4 – so just the slightest uptick, but even so, it’s back in the black rather than the red. Europe was still down 2.4 per cent mind, but the overall revenue was buoyed by Africa, Middle East and Asia-Pacific being up 6 per cent.

Over the course of the full year, service revenue was still down 1.6 per cent (due to the aforementioned drops in the first three quarters).

Vodafone’s earnings were £11.9 billion over the year, down 7 per cent compared to the previous year, though the drop in the second half of 2015 was less at 3.6 per cent.

The company pegged its free cash flow at £1.1 billion, and net debt at £22.3 billion.

The network also noted that it now has 20.2 million 4G users over 18 markets, and European 4G coverage stands at 72 per cent of the areas where Vodafone offers a service.

Vittorio Colao, Group Chief Executive, said: “It has been a year of continued progress, culminating with a return to organic growth in Q4. We have seen increasing signs of stabilisation in many of our European markets, supported by improvements in our commercial execution and very strong demand for data.

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“In fixed line, revenue trends are improving supported by accelerating customer growth, and our recent cable acquisitions provide a strong platform for further growth. In emerging markets, our good growth trend has continued, driven by rising data penetration and leading network quality and distribution.”

Ken Odeluga, senior market analyst at City Index commented: "Vodafone is trumpeting its first rise in its favoured measure of quarterly sales in about three years. The 0.1 per cent uptick in quarterly organic sales revenue breaks a 10-quarter streak of quarterly declines on this line, which is perhaps Vodafone’s most precise meter of income, considering that VOD is a high-frequency consolidator.

"How genuine (or even sustainable) this achievement is, is questionable; over the course of the full-year, organic service revenues fell 1.6 per cent, whilst Ebitda retreated 6.9 per cent, with 3.6 percentage points of that fall taking place in the second half - suggesting we would have to accept that VOD’s 0.1 per cent rise in service revenue happened late in the financial year.

"Even if we do, in my view it’s probably too early to assume Vodafone has finally discovered a formula to beat pressures on revenue from tightening regulations in Europe and a global downspin in consumer sales growth.

"Seven years of declining organic growth seems to need something more convincing than a late-year bump. There’s nothing alarming in the rest of the headline numbers, with capex plans and the cash position in-line.

"Vodafone may just have to accept that at least for now, inorganic growth is the best it can offer. (E.g.: in the last year it added KDG and Ono: both integrations are on track)."

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