Vodafone 2000 Annual Report Download - page 6

Vodafone AirTouch Plc Annual Report & Accounts for the year ended 31 March 2000
4
Business Review
Europe, Middle East & Africa
•Pro forma proportionate customers increased by 71% to
15.6 million.
•Pro forma total Group operating profit before goodwill,
increased by 34% to £1,321m.
•Group interest in E-Plus disposed of at a profit of £939m.
•Commercial service launched in Hungary and increased
ownership interests in Italy, Poland and Romania.
•Pro forma proportionate mobile customers increased to over
28.9 million customers (excluding Orange) through the
Mannesmann acquisition.
•In May 2000, creation of new multi-access Internet portal
company for Europe, operating under the VIZZAVI global
brand name.
At 31 March 2000, the EMEA region had network operations in sixteen
countries, operating through seven subsidiary network companies and
nine associated undertakings. Pro forma customer and profit growth
during the year, which exclude any impact from the acquisition of
Mannesmann AG, for which European Commission clearance was
received on 12 April 2000, were strong across the region.
EMEA’s proportionate customers increased to 15,662,000 at 31 March
2000, which represents pro forma growth for the year of 6,492,000
customers (71%). Pro forma proportionate turnover increased by 38%
to £4,437m for the year, whilst pro forma proportionate EBITDA
increased from £1,127m to £1,492m, growth of 32%.
Pro forma consolidated turnover for the year to 31 March 2000 grew
by 26% from £1,617m to £2,030m, with EMEA’s contribution to pro
forma total Group operating profit, before goodwill, increasing by 34%
to £1,321m.
During the year, the Group increased its shareholdings in several of its
associates. In August 1999, the Group exercised an option to increase
its stake in Omnitel Pronto Italia, Italy’s second GSM network, from
17.8% to 21.6% and, in November 1999, the Group increased its stake
in MobiFon, Romania’s third GSM operator, from 10.0% to 20.1%.
In December and January, the Group exercised its pre-emption rights
to increase its shareholding in Polkomtel, Poland’s second GSM
operator, from 19.25% to 19.61%.
With the further consolidation of the distribution chain in a number of
EMEA markets, certain subsidiaries also made strategic acquisitions
during the year. In Greece, Panafon acquired a 25% shareholding
in a service provider, Mobitel, subject to regulatory approvals and,
in Sweden, Europolitan acquired a dealer chain, Ocom.
Growth in prepaid services has continued and, at 31 March 2000,
over 54% of the region’s proportionate customers were connected to
prepaid tariffs, compared with 30% a year earlier. As a result of the
change in mix towards prepaid, and the general trend of lower tariffs
across the region, ARPU (at constant exchange rates) declined from
£354 last year to £318 in the year to 31 March 2000. Average
network churn in the region remained low during the year at 20.5%,
calculated on a pro forma basis.
Following the AirTouch merger on 30 June 1999, the Group’s listed
subsidiaries include Telecel and Europolitan. These are in addition to
Panafon and Libertel, the latter being listed on the Amsterdam Stock
Exchange in June 1999. The market capitalisation of these companies
at the end of the year was as follows:
Market capitalisation
Listed in 31 March 2000
Europolitan Stockholm £5.5bn
Libertel Amsterdam £4.2bn
Panafon Athens £4.7bn
Telecel Lisbon £2.6bn
On 30 November 1999, the Group’s 50.1% subsidiary, Vodafone
Hungary, commenced commercial service as the third cellular
network operator in that country.
On 4 February 2000, the Group completed the sale of its 17.24%
interest in E-Plus Mobilfunk GmbH in accordance with an undertaking
provided to the European Commission as part of the AirTouch merger,
giving a profit on disposal of £939m.
On 13 March 2000, Airtel Móvil in Spain was the first EMEA mobile
operator to be awarded a third generation (UMTS) licence.
The company is expected to build out its network during 2001,
with service launch anticipated in late 2001, subject to infrastructure
and handset availability.
Acquisition of Mannesmann
Following the European Commission’s approval of the acquisition of
Mannesmann AG on 12 April 2000, the Group’s effective interest in
Mannesmann Mobilfunk and Omnitel Pronto Italia increased to
approximately 99.1% and 76.0%, respectively. This resulted in an
approximate 13.3 million increase in the region’s total pro forma
proportionate customers to over 28.9 million (excluding Mannesmann’s
interest in Orange), based on total venture customers of 51.1 million
at 31 March 2000.
Discussions are underway to achieve the rapid integration of the former
Mannesmann businesses into the existing Vodafone AirTouch portfolio.
This will ensure that initiatives to realise the significant potential
synergy benefits, both on cost (in areas such as infrastructure and
handset procurement) and revenues (through improved product
offerings across the enlarged European footprint), will start immediately.
In addition to the increased shareholdings in mobile operations, the
Group also acquired Mannesmann’s interests in the following fixed line
businesses – Arcor in Germany, Infostrada in Italy, Cegetel in France
and tele.ring in Austria. tele.ring also plans to launch a mobile service
in Austria in June 2000, following its successful bid for a new licence,
and will be the fourth mobile operator in the Austrian market.
Vivendi has indicated its interest in purchasing the Group’s entire 15%
shareholding in Cegetel’s capital stock.