Voda­fone’s shares surge amid growth pre­dic­tions

Western Mail - - BUSINESS IN WALES -

SHARES in Voda­fone have surged af­ter the tele­coms gi­ant swung to profit and upped its growth out­look thanks to solid growth in Spain and Italy.

The firm was up more than 5% in af­ter­noon trad­ing on the London Stock Ex­change af­ter hik­ing its an­nual growth tar­gets for earn­ings from be­tween 4-8% to around 10%. The FTSE 100 com­pany is ex­pect­ing full-year earn­ings of be­tween £13.15-£13.33bn.

In a dou­ble dose of cheer, Voda­fone recorded a £1.1bn profit for the six months end­ing in Septem­ber, up from a £4.5bn loss over the pe­riod last year.

The boost came af­ter the group booked a hefty charge on its In­dia op­er­a­tion dur­ing the six-month pe­riod in 2016.

Voda­fone said half-year pre-tax prof­its had climbed 55% to £1.9bn, with mo­bile data traf­fic soar­ing 88% thanks to strong de­mand in In­dia and Europe.

While UK ser­vice rev­enues dropped by 9.6%, Italy and Spain churned out bright per­for­mances, ris­ing 2.1% and 2.3% re­spec­tively.

Group chief ex­ec­u­tive Vit­to­rio Co­lao said: “Rev­enue grew or­gan­i­cally in the ma­jor­ity of our mar­kets, driven by mo­bile data and our con­tin­ued suc­cess as Europe’s fastest-grow­ing broad­band provider.

“Enterprise rev­enues con­tinue to grow, led by our in­ter­net of things (IoT), cloud and fixed ser­vices, and for the sec­ond year run­ning we achieved an ab­so­lute re­duc­tion in our op­er­at­ing costs.

“As a re­sult, we are able to re­port a strong fi­nan­cial per­for­mance, with sub­stan­tial EBITDA (earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­sa­tion) mar­gin ex­pan­sion and profit growth, and we are rais­ing our fi­nan­cial out­look for the year.”

De­spite the prof­its swing, group rev­enue slipped 4.1% to £20.58bn fol­low­ing the con­sol­i­da­tion of its Voda­fone Netherlands arm and the cre­ation of joint ven­ture Voda­foneZiggo.

The In­dia unit proved a drag on the busi­ness, sink­ing more than 15.8% fol­low­ing ri­val mo­bile op­er­a­tor Re­liance Jio’s ag­gres­sive push into the mar­ket.

Mr Co­lao said the com­pe­ti­tion in In­dia “re­mained in­tense” and Voda­fone’s cus­tomer base had fallen, but it had still man­aged to hold on to mid and high-value cus­tomers. The up­date comes af­ter Voda­fone In­dia and Idea Cel­luar an­nounced the sale of their In­dia tele­coms tower busi­ness for £915m to Amer­i­can Tower on Mon­day.

Laith Kha­laf, se­nior an­a­lyst at Har­g­reaves Lans­down, said: “Voda­fone has posted a strong set of re­sults, de­spite head­winds from a strong euro, and in a sign of grow­ing con­fi­dence, the group has up­graded its profit fore­casts for the full year, which has bumped the share price up con­sid­er­ably.”

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