Vodafone Group Plc yesterday announced key performance indicators, presented under IFRS, for the quarter ended 30 June 2005.
Arun Sarin, Chief Executive of Vodafone, commented: “We have seen strong performances across Europe and in the US, and we continue to focus on improving our business in Japan. 3G is building momentum with over one million more registered devices in the quarter. Vodafone has delivered another impressive quarter of customer growth, with 4.1 million organic net additions. Our proportionate customer base, now over 165 million, has seen organic growth of 12.3% from a year ago. Proportionate mobile revenues were also strong and delivered 8.6% organic growth year on year. Overall these KPIs are in line with our expectations and we are therefore reiterating our guidance for the full year to March 2006.”
Vodafone Germany delivered a quarter of strong customer growth with 497,000 net additions, taking the total base to 27.7 million, 8.8% higher year on year. Blended annual churn was stable compared to that at March, with a small improvement in contract offset by a slight increase in prepaid. Blended annual ARPU for the year to June was €295 compared to €299 for the year to March. The impact of lower spending new customers, as well as the effect of termination rate reductions, continues to offset ARPU increases from minute bundle plans and new services. Strong customer growth was the primary driver behind the 4.1% increase in service revenue for the quarter compared to the same quarter last year. Non-voice service revenue increased by 11.7% year on year, including an 83% increase in non-messaging data revenue, with Vodafone live! users increasing to 5.2 million and registered 3G devices exceeding 0.5 million. Net acquisition and retention costs as a percentage of service revenue in the quarter were lower than the same period last year and the quarter to March due to a higher proportion of lower spending, and therefore lower subsidy, customer additions.
Proportionate net customer additions were 204,000 in the quarter. The total proportionate customer base was 17.5 million at the end of June, 6.4% higher year on year on an organic basis. Blended annual ARPU increased to €360 for the year to June compared to €359 for the year to March. Annual churn increased slightly when compared to March. Service revenue for the quarter increased 6.5% compared to the same period last year, with continued customer growth being the primary driver. Non-voice service revenue increased by 18.4% year on year, including 50.7% growth in non-messaging data revenue. Successful promotions and further penetration of Vodafone live! users, now at 2.5 million on a proportionate basis, have contributed to this growth. Of the Group’s European operations, Vodafone Italy has the highest number of 3G devices registered on its network at over 0.7 million on a proportionate basis. Net acquisition and retention costs as a percentage of service revenue in the quarter were higher than the same period last year and the quarter to March, reflecting the increase in competitive activity in the Italian market and a particular focus on attracting and retaining high value customers. However, these costs still remain at very low levels when compared to the rest of the Group.
Vodafone UK regained momentum in the quarter with 165,000 net customers added, taking the total base to 15.5 million customers, an increase of 8.9% year on year. Annual churn increased slightly compared to March, driven in large part by an increase in prepaid churn. Blended annual ARPU reduced to £300 from £306 for the year to June compared to the year to March, principally due to the impact of the reduction in incoming call termination rates. The growth in average customers was substantially offset by the fall in ARPU resulting in service revenue growth of 0.6% for the quarter when compared to the same quarter last year. Excluding the effect of the reduction in termination rates, service revenue grew by 4.5%. Non-voice service revenue increased by 11.9% year on year, including a 50.7% increase in non-messaging data revenue. Vodafone live!, with users now at 3.7 million, and Vodafone Mobile Connect were the drivers behind this strong growth. Net acquisition and retention costs as a percentage of service revenue in the quarter were higher than the same period last year and the quarter to March due to increased customer growth and upgrade activity.
The closing proportionate customer base in Japan was 14.6 million. Vodafone Japan recorded positive net additions of 5,000 in June, but a net reduction of 72,000 for the quarter. Annual churn levels fell slightly compared to March, benefiting from the continued investment in customer retention activities and the introduction of new price plans and promotions. Blended annual ARPU fell to ¥73,034 for the year to June from ¥73,780 for the year to March, reflecting the competition in the market. The rate of ARPU decline has reduced, driven by an improving mix of customers who have been acquired compared to those who have churned. Service revenue for the quarter decreased by 4.1% compared to the same quarter last year, primarily due to the fall in ARPU. Non-voice service revenue was stable year on year, having declined in each quarter of the previous financial year. This was primarily due to the increasing 3G customer base, with higher data usage, that has reached nearly 1.2 million. Net acquisition and retention costs as a percentage of service revenue in the period were higher than the same quarter last year but were lower than in the quarter to March. This is primarily due to retention costs being higher year on year, albeit at a lower level than the prior quarter.
Vodafone Spain continued to perform very strongly, adding a further 368,000 net customers in the quarter to June. At the end of June, the total customer base stood at 11.8 million customers, an increase of 18.9% year on year. The proportion of contract customers in the base continues to increase and churn has improved both quarter on quarter and year on year. Blended annual ARPU increased to €421 for the year to June from €414 for to the year to March, benefiting from the focus on high value customers. 3
The strong growth in customers and ARPU generated service revenue growth of 26.2% year on year. Service revenue growth has now exceeded 20% year on year for six successive quarters. Voice revenues increased by 24% year on year, driven by an improving customer mix and higher usage. Non-voice service revenue increased by 42.1% year on year, with messaging revenue increasing by over 30% and non-messaging data revenue more than doubling. Vodafone live! users increased by over 500,000 in the quarter to reach a total of 3.5 million, representing the highest penetration, as a percentage of total customers, of Vodafone live! in the Group. Notwithstanding the continued strong growth and focus on high value customers, net acquisition and retention costs as a percentage of service revenue in the period were lower than both the same quarter last year and the quarter to March.
Other Mobile Operations
The Group has 13 other subsidiaries, which increased from 11 at March with the inclusion of Romania and the Czech Republic. MobiFon in Romania increased its venture customer base to over 5.2 million in the quarter, more than 28% higher year on year. In the Czech Republic, Oskar increased its venture customer base to more than 1.9 million, representing growth of over 16% year on year. On a proportionate basis, the Group’s other subsidiaries delivered organic growth in customers of 14.8% and in service revenue of 6.7%, with particularly strong service revenue performances in Egypt and Hungary, both growing in excess of 20%, and New Zealand which recorded double digit growth. Vodacom in South Africa produced proportionate net additions of 574,000, bringing the proportionate closing base to 5.7 million, over 35% higher year on year on an organic basis. Vodacom launched Vodafone live! with 3G in April. Verizon Wireless recorded net additions of over 1.9 million, the highest level since its formation in April 2000, with the Group’s proportionate share at 850,000. In France, the Group’s proportionate share of SFR’s customer base increased to 7.1 million, representing organic growth of 8% year on year. On a proportionate basis, SFR has 1.3 million registered Vodafone live! customers and over 130,000 Vodafone live! with 3G registered devices.