Vodafone’s Emerging Markets Drive Growth

Vodafone Group had almost 200 million customers by Dec. 31, but continues to face challenges in the competitive and saturated European market.

The operator’s European business stagnated, with fourth-quarter revenue growing just 0.9 percent year on year, excluding the effect of acquisitions. Worldwide, its growth excluding acquisitions totaled 6.1 percent. The company accounts for revenue from partly owned subsidiaries in proportion to its holding.

Vodafone said that despite low growth in Europe, some of its new calling plans, such as one that offers users a lower price for calls made within users’ home area and others that include fixed-line broadband Internet access, are attracting new customers. Price competition, however, is offsetting that growth.

Revenue from Vodafone’s operations outside Europe, excluding acquisitions, grew 14.4 percent compared to a year earlier. Egypt, Romania, South Africa and Turkey showed particularly strong growth during the period, Vodafone said.

The operator offered no further insight into its negotiations to buy a controlling interest in Indian operator Hutchison Essar. The board is continuing to investigate the possibility and will only agree to a deal that meets Vodafone’s financial criteria, Vodafone CEO Arun Sarin said during a conference call to discuss the results.

U.S. operator Verizon Wireless, in which Vodafone owns a stake, also did well during the quarter, with Vodafone’s share of the business acquiring 1 million new customers.

Vodafone is still pleased with its stake in Verizon Wireless, although the company uses a different wireless technology to that used by Vodafone’s holdings elsewhere in the world.

“There is no concept of our selling our interest there,” Sarin said.

While rumors have surfaced regularly over the past few years that Verizon Wireless might be considering a major technology change, that’s still doubtful, Sarin said. Even Apple’s much-anticipated iPhone, which operates on GSM (Global System for Mobile Communications), the technology that competes with Verizon’s code division multiple access network, is unlikely to encourage Verizon to make a change, Sarin said.

The migration to fourth-generation networks, which operators will begin to make in the next few years, will probably cement Verizon’s choice. “That’s the time Verizon Wireless will think about what next generation of technology that they can deploy, and of course they’ll try to deploy a technology that is as backward compatible as they can,” he said.

Data services are also paying off for Vodafone. Non-voice average revenue per user was up 62 percent for the quarter compared to the year earlier.

Vodafone has attracted 50 percent of its total customers to sign up for Passport, a plan that offers reduced rates on roaming. The European Commission is proposing a regulation that would require operators to reduce their roaming rates. Vodafone doesn’t expect the commission to make a final decision until this summer, said Sarin.

-Nancy Gohring, IDG News Service (Dublin Bureau)

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