Mobile data demand helps Vodafone lift profit forecast
DEMAND for reliable internet access and heavy investment in its networks have helped Vodafone turn the tide against wi-fi across Europe, as it reported the proportion of data consumed by its customers over their mobile connections increased for the first time in years. Wi-fi still accounts for the majority of data consumed on smartphones, chief executive Vittorio Colao admitted, but faster and better mobile coverage means public hotspots in cafes and hotels are now on their way out.
The shift was part of an upbeat halfyear report from Vodafone, which upgraded its profit and cash flow forecasts partly on the back of better-thanexpected service revenues across Europe. Mr Colao said: “It is the first time we have raised Vodafone’s organic earnings guidance in recent history.” The telecoms giant said it now expects its full-year organic earnings before interest, tax, depreciation and amortisation (Ebitda) to increase by around 10pc to as high as €14.95bn (£13.4bn). That compares with its earlier forecast of 8pc growth to a maximum of €14.5bn.
The shares closed up more than 5pc at 227p as the company reaped the benefits of years of investment in mobile upgrades and a push into fixed-line broadband.
Vodafone’s upgrade included some one-off benefits, such as a £100m cheque from BT’s network subsidiary Openreach, which failed to pay compensation for installation delays. Mobile operators rely on fixed lines provided by Openreach to connect their masts.
Organic service revenues, the measure of Vodafone’s core sales, were up 1.7pc in the first half to €20.6bn. Excluding the impact of price cuts imposed by regulators the increase was 2.6pc.
There was a slowdown in the second quarter driven by the company’s African and Middle East operations. In Europe momentum was maintained, however.
On a statutory basis revenues were down 4pc to €23.1bn as Vodafone deconsolidated its Dutch mobile arm to merge it with Liberty Global’s cable business in the Netherlands.
Vittorio Colao, chief executive, said better mobile coverage means wi-fi hotspots are not so popular