Downturn hits Vodafone Ireland revenue

Operating profit at global mobile phone group Vodafone rose as revenues climbed and a cost-cutting programme was implemented.

However, service revenue at its Irish division declined in the year ended March 31st 2010 as the economic downturn and increased competition weighed on figures.

Vodafone Ireland's strategy director Gerry Fahy said the last 12 months had seen value become increasingly important. The mobile network has cut prices by about 21 per cent in the year.

In the three months ended March 31st 2010, average blended monthly revenue per user fell 7.7 per cent to €36.10 from €39.10. However, Irish customers continued to use more voice minutes at 257 each month and 200 text messages compared with the European average 152 voice minutes and 89 text messages.

The mobile network has more than 2.1 million mobile customers in Ireland at present.

It recently began offering the iPhone to its customers, and in the two weeks after the launch said more than 40,000 iPhones were being used on its network.

Vodafone Ireland has also moved into the fixed line business in the past 12 months, with the acquisition of BT's consumer and small business retail customer base. At the end of March 2010, the company had 194,000 fixed line and DSL customers.

The telecoms firm said it has 20 per cent of the DSL broadband market, and is heavily investing in its mobile broadband offering.

Adjusted operating profit before tax for the wider Vodafone group was up 0.9 per cent to £10.6 billion. Earnings before interest, taxes, depreciation and amortisation rose 1.7 per cent to £14.7 billion from £14.5 billion a year earlier, the company said, slightly below analysts' expectations of £14.8 billion.

Group revenue increased 8.4 per cent to £44.5 billon, while service revenue for the group rose 8.9 per cent to £41.7 billion, the company said. On an organic basis, sales fell 2.3 per cent.

The mobile phone company has cut jobs and signed network-sharing agreements with other operators to lower costs. Vodafone and Telefonica last year agreed to share wireless network components to cut costs and improve coverage for more than 140 million of their users.

"Cost reduction targets were delivered ahead of schedule enabling commercial reinvestment to improve market share and further strengthen our technology platforms," Vodafone chief executive Vittorio Colao said in a statement.

"We are creating a stronger Vodafone, which is positioned to return to revenue growth during the 2011 financial year, as economic recovery should benefit our key markets."

The company is targetting an annual dividend per share growth of no less than 7 per cent for the next three financial years.

The mobile-phone company has expanded into emerging markets in the last four years to bolster growth with acquisitions in countries including Turkey, India, South Africa and Ghana.

In India, the world's second-largest wireless market by subscribers, Vodafone is facing increased costs for third- generation services. Bids for a license to offer faster wireless services reached the
equivalent of $3.54 billion on the 31st day of an auction.

The company said today it took an impairment charge of £2.3 billion as a result of the Indian auction.

Vodafone also has an option to acquire the remaining 33 per cent stake in Vodafone Essar, the company's Indian unit, for $5 billion this year. Vodafone is also seeking the resumption of a dividend from its Verizon Wireless joint venture in the US.

The company is in talks with partner Verizon Communications over options for Vodafone's 45 per cent stake, people familiar with the matter said in March.

Additional reporting: Bloomberg