Vodafone showed operating improvement in the quarter ended December 31, 2009, with 410,000 new customers on its books and its sharp revenue slide through the middle of last year slowed somewhat. It put the good of its UK performance down to new propositions, smartphones and indirect channel activity.
Vodafone added 410,000 customers in its third financial quarter, taking its total UK base to 19.114 million, with 56 per cent prepay customers. UK churn was 18.1 per cent and 51.7 per cent among contract and prepay bases, respectively.
UK service revenue was £1.177 billion in the period, down four per cent from £1.226 billion in the year-ago quarter. However, its UK operation showed improvement sequentially, which it put down to “the launch of new products and indirect distribution channels”.
Voice revenue dropped more than 17 per cent to £648 million, which it put down to competitive price reductions and a termination rate cut effective from July 2009.
Messaging revenue as up almost 12 per cent to £267 million and data revenue was up almost 22 per cent to £150 million, driven by unlimited message plans and the growth in mobile internet bundles. Fixed line service revenue was flat at £8 million.
Vodafone Group, meanwhile, claimed a revenue increase of 10.3 per cent to £11.5 billion, and service revenue jump of 11 per cent to £10.7 billion.
Vodafone said adjusted operating profit is expected to be in the range of £11.4 billion to £11.8 billion, in line with expectation. It also upgraded its anticipated free cash flow by £0.5 billion to between £6.5 billion and £7 billion for the full year.
Also, it reported Group data revenue had exceeded £1 billion for the first time, up 17.7 per cent on the same period in 2008, with good take-up of smartphones in Europe where its data users now exceed 30 million. Data as a percentage of service revenue in Europe was 11 per cent, up for the sixth consecutive quarter.
Fixed line revenue grew by 10 per cent to £862 million in the quarter and its European broadband customer base is now over five million.
It said cost-cutting is on track, following announcement at the end of last quarter that it had extended its original ambition to strip the business of £1 billion in costs by 2012 to take £2 billion of operational expenditure out of the business in the timeframe.
Vodafone Group chief executive Vittorio Colao (pictured) said: “Service revenue trends have improved with continuing growth in our data and fixed line revenue. Free cash flow guidance has been raised reflecting the impact of our cost and working capital reduction programmes. We are on track to deliver on our strategic priorities in the current financial year.”