Vodafone Sees Year Revenues At Lower End Of Range

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Vodafone sees year revenues at lower end of range

22 Jul, 2008, 1204 hrs IST, ET

LONDON: Mobile phone group Vodafone posted first-quarter revenue in line with forecasts on Tuesday but said full-year revenue was expected to be around the bottom of its previously stated range due to economic weakness.

Vodafone, the world's largest mobile phone company by revenues, said it added 8.5 million subscribers in the three months to the end of June, taking the company's proportionate customer base to around 269 million.

Group revenues climbed 19.1 per cent to 9.8 billion pounds ($19.57 billion), with organic growth - which strips out acquisitions and disposals - of 1.7 per cent.

Analysts had expected first quarter revenues of 9.8 billion pounds, according to a poll for Reuters Estimates.

But the British-based group said it now expected its full-year revenue to be around the bottom of its previously stated range of 39.8 billion pounds to 40.7 billion pounds due to recent economic weakness and lower than expected equipment revenue.

"Notwithstanding this more challenging operating environment, we continue to benefit from a diversity of assets and services, with strong revenue growth in (emerging countries) and another good quarter of data revenue growth offsetting weakness in Spain," Chief Executive Arun Sarin said.

"Whilst we expect revenue around the bottom of the outlook range, our continued focus on cost reduction enables us to reiterate our operating profit and cash flow guidance for the year."

The results will be the last for Sarin, who will step down after five years on July 29 and be replaced by his deputy Vittorio Colao.

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Vodafone unveils $2 bn share buyback

23 Jul, 2008, 1838 hrs IST, ET

LONDON: Mobile phone group Vodafone moved quickly to defend its share price on Wednesday, announcing a surprise 1 billion-pound ($2 billion) buyback programme after its stock crashed a day earlier on a weaker-than-expected trading update.

Vodafone shares slumped almost 14 percent on Tuesday, wiping nearly 11 billion pounds off its market value, after the group said its full-year revenue would be at the bottom of a previously stated forecast range.

The news dented hopes the Britain-based firm would be relatively resilient to an economic downturn and cast a shadow over the whole telecoms sector. "The board of Vodafone Group Plc has considered the market reaction ... and has decided to introduce a 1 billion-pound share repurchase programme with immediate effect," the world's biggest mobile phone group by revenue said in a statement.

"This action reflects the board's belief that the share price significantly undervalues Vodafone." Shares in the group were 0.8 percent higher in afternoon trading, in an overall higher market, valuing the company at about 80 billion pounds.

Collins Stewart analyst Mark James said he expected a relief rally in the telecoms sector on Wednesday, helped by the Vodafone buyback and positive news from Dutch telecoms group KPN, but he remained concerned about the future.

"We believe that the medium-term outlook for telco cash generation is deteriorating," he said in a note to clients. "Spectrum auctions; M&A; increasing competition/regulation and convergent business models may all dent cash generation, and as Vodafone Q1 has shown, not even telcos are immune to an economic slowdown.

"We believe underperformance is set to continue." Vodafone lowered its outlook on Tuesday citing economic weakness, particularly in Spain, which was resulting in fewer customers buying and using new handsets.

Shareholder support

Vodafone said it could start the buyback immediately under authority given at its annual shareholder meeting last July, and would need approval from its meeting on July 29 to complete it. It will pay up to 105 percent of the share's average closing price on the five business days before the buyback.

Analysts at Cazenove said despite the "surprising move", it was difficult to see the group's shares staging any immediate and sustained recovery.

"This amounts to around 1.5 percent of Vodafone's outstanding share capital or 775 million shares at yesterday's close; as such, the financial implications are not material with sentiment and management's confidence being the more important issues to consider," they wrote.

Vodafone shares fell to a 20-month-low on Tuesday after it said it expected revenues to be around the bottom of its previously forecast range of 39.9 billion pounds to 40.7 billion pounds.

Norway's Telenor sounded similar concerns on Wednesday when it posted a surprise 1.5 percent fall in second-quarter core earnings and cut its 2008 revenue growth target due to a strong crown and inflation which is crimping spending on telephony.