Vodafone to spend £7bn on networks

BRITAIN’S Vodafone will spend £7 billion (R116bn) – more than expected, earlier than expected – to increase the speed and capacity of its networks and reverse a record fall in revenues resulting from its struggling European business.

The second-largest cellular operator, which is using some of the proceeds from the $130bn (R1.3 trillion) sale of its US arm to Verizon Communications to upgrade its infrastructure, said it would spend £3bn in Europe, £1.5bn in its emerging markets and the rest on fixed-line assets and corporate customers.

It will complete the programme by March 2016 – £1bn more than expected and a year earlier than forecast – to meet the demand of consumers who want on-the-go internet access via smartphones and tablets.

“Whilst trading conditions in Europe remain very tough at present, we are encouraged by the forecast return to economic growth over the next two years,” chief executive Vittorio Colao said yesterday.

Shares in Vodafone were up 0.7 percent at £2.29 in early trade in London yesterday, outperforming the European telecoms index, which was down 0.3 percent.

The group, which is seen as a possible bid candidate for US group AT&T, announced the details of its Project Spring spending programme as it reported first-half results showing pressures across the group.

The group’s organic service revenue, which strips out oneoff items such as handset sales, was down 4.9 percent in the second quarter due to regulator-imposed price cuts and fierce competition in Italy, Spain, Germany, Turkey and Britain. That was worse than the 3.5 percent fall recorded in the first quarter and well below the last record fall of 4.2 percent in the fourth quarter.

It said the spending plans would have a peak impact on core earnings. – Reuters