Vodafone FY07 results

Vodafone released its fiscal year results. FY07 net profit narrowed to €8bn (from €32bn last year), operating profit rose slightly to €14bn and revenues of €46bn, up 6%. EBITDA rose 1% to €17.7bn. Globally, the results are not too bad; so the stock jumped almost 5.5% at the announcement. Looking in more details shows that revenues have very different patterns between Europe (mature mobile markets) and the rest or EMEPA (for Eastern Europe, the Middle East, Africa, the Asia Pacific and affiliates) made of emerging markets. In Europe, growth is limited and the strategy consists in driving new usage (multimedia) as well as voice usage. But European conditions are challenging with price pressure and regulatory conditions (EU recently decided to cap mobile roaming charges). "We have got good growth drivers but, equally, these growth drivers are being offset by pricing and regulatory pressure." As a results European revenues modestly rose 1.4% on an organic basis. On the opposite, EMEPA revenues went up 14.3%, with some countries (Turkey 37%, Egypt 41%, Romania 28% and South Africa 22%) performing well. What is remarkable also is that EMEPA accounts for 40% of its profits. So, Vodafone's strategy to offset slowing growth in Europe by expanding in emerging markets (more recently in Turkey and India) seems paying off. Other key points are noticeable. Vodafone performs more than 18% of its revenues in data and it grows at 30% rate. On a proportionate basis, Vodafone announced 206m mobile subscribers, not including 27m subscribers at Hutchison Essar, and 15.9m 3G subscribers (+100%).

Vodafone also published its guidance for FY08: revenues would be around €50bn and operating profit around €14bn. Capex would be around €èbn - €7.5bn.