Strong growth in Turkey and India offsets Vodafone’s European Woes



Gorwth in Turkey and India Operations have Offset Vodafone's European Revenue Losses

Gorwth in Turkey and India Operations have Offset Vodafone’s European Revenue Losses

The world’s biggest mobile phone operator Vodafone couldn’t escape the financial woes of Europe, while strong growth in Turkey and India helped stabilise earnings in the first quarter.

Global revenues grew by a meager 1.5 percent year-on-year, but were down 2.5 percent quarter-on-quarter. The company said conditions in southern Europe, particularly in Spain and Italy, remained “challenging” where revenues fell by 9.9 percent and 1.5 percent respectively, due to price reductions.

However, revenue grew by 32.1% and 16.8% in Turkey and India respectively. Sales of Vodacom in South Africa also grew by 7.8%.

Sales in Germany were nearly flat with a growth of 0.2% while UK sales were up by 1.7%.

Vodafone said they would stick to their full year guidance of an operating profit between £11 billion and £11.8 billion and said the first quarter results were as expected.

“We have made a good start to the year, reporting robust results despite challenging macroeconomic conditions across southern European economies and the impact of cuts to mobile termination rates. Revenue from our key focus areas of data, enterprise and emerging markets continues to grow strongly. With our broad geographical mix and improving market positions, we are well placed for the rest of the financial year,” said chief executive officer Vittorio Colao.

The free cash flow (FCF) for the first quarter has been estimated at £1.3 billion, which supports the company’s dividend yield forecast of 5.8%. The FCF for the year is estimated between £6 billion and £6.6 billion, which seems pretty much achievable.

Vodafone’s net debt has reduced to 23.1 billion, after it the company sold its 44% stake in French operator SFR for £6.8 billion. Net debt currently is nearly one third of its market capitalization of £82 billion. The company will be used part of the gains from SFR sale to buy-back shares worth £4 billion.

Some national regulators in Europe have cut down mobile termination rates, which also affected Vodafone’s European trading.

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