Vodafone 2008 Annual Report Download - page 47

Mobile telecommunications KPIs
Germany Italy Spain UK Other Europe
Closing customers (’000) – 2007 30,818 21,034 14,893 17,411 17,007 101,163
– 2006 29,191 18,490 13,521 16,304 15,692 93,198
Closing 3G devices (’000) – 2007 3,720 3,762 2,890 1,938 2,353 14,663
– 2006 2,025 2,250 902 1,033 1,230 7,440
Voice usage (millions of minutes) – 2007 33,473 32,432 30,414 31,736 28,491 156,546
– 2006 26,787 29,604 23,835 28,059 27,648 135,933
See page 155 for definition of terms
The Europe region, where market penetration exceeds 100%, experienced intense
competition from established mobile operators and new market entrants as well
as ongoing regulator imposed rate reductions on incoming calls. As part of the
implementation of the Group’s strategy, the 2007 financial year’s performance
saw a strong focus on stimulating additional usage in a way that enhances value
to the customer and revenue, including significant tariff repositioning to maintain
competitiveness in the UK and Germany. On the cost side, the centralisation of
global service platform operations was completed in the 2007 financial year, with
good progress made in the consolidation and harmonisation of the data centres,
and a number of new initiatives to reduce the cost structure were implemented.
Revenue
Revenue decreased slightly by 0.6% for the year ended 31 March 2007, consisting of
a 1.4% organic increase in revenue, offset by a 0.5 percentage point adverse impact
from exchange rate movements and a 1.5 percentage point decrease resulting
from the disposal of the Group’s operations in Sweden in January 2006. The organic
revenue growth was mainly due to the increase in organic service revenue.
Service revenue growth was 0.1% for the Europe region. Organic growth of 2.0%
was driven by a 7.7% increase in the average mobile customer base, together with
a 17.0% increase in total voice usage and 27.1% reported growth in data revenue,
driven by innovative products and services, successful promotions and competitive
tariffs in the marketplace, although in turn organic growth was largely offset
by the downward pressure on voice pricing and termination rate cuts in certain
markets. The estimated impact of termination rate cuts and other adjustments
on the growth in service revenue and revenue is shown below.
Estimated
impact of
termination
rate cuts
Impact of and other Growth
exchange Impact of adjustments(1) excluding
Reported rates disposal Organic on revenue these
growth Percentage Percentage growth growth items
% points points % % %
Service revenue
Germany (4.4) 0.5 − (3.9) 3.4 (0.5)
Italy (2.1) 0.6 − (1.5) 5.1 3.6
Spain 12.4 0.7 − 13.1 5.2 18.3
UK 2.5 − − 2.5 0.5 3.0
Arcor 8.7 0.8 − 9.5 − 9.5
Other Europe (7.6) 0.4 7.3 0.1 4.7 4.8
Europe 0.1 0.5 1.4 2.0 3.5 5.5
Revenue − Europe (0.6) 0.5 1.5 1.4 3.2 4.6
Note:
(1) Revenue for certain arrangements is presented net of associated direct costs.
Customer growth in the region was strong in most markets, including 21.7%
and 16.9% growth in the closing contract customer base in Spain and Italy,
respectively. The UK reported a 7.7% growth in the closing contract base following
a much improved performance in the second half of the 2007 financial year.
Contract churn across the region was stable or falling in most markets due to
the continued focus on retention and longer contract terms being offered, while
prepaid churn rose due to intensified competition and customer self-upgrades.
Prepaid markets remained vibrant, with prepaid net additions accounting for
around 65% of the total net additions reported for the region.
Within the Europe region, Spain and Arcor contributed strong service revenue
growth, partly offset by declines in Germany, Italy and Other Europe. In Spain,
despite the increasing challenge in the marketplace from existing competitors,
the launch of a fourth operator and branded resellers, service revenue growth
of 13.1% at constant exchange rates was achieved. This growth was mainly due
to a 14.2% increase in the average mobile customer base in the period following
successful promotions and competitive tariffs, particularly in relation to contract
customers, which at 31 March 2007 account for 54.8% of the customer base,
compared to 49.6% at 31 March 2006. Arcor also achieved strong growth in
service revenue compared to the 2006 financial year, driven primarily by a 60.0%
increase in fixed broadband customers to 2,081,000 customers, with the launch
of new competitive tariffs leading to particularly good growth since January 2007.
Despite high competition and structural price declines, service revenue growth
in the UK accelerated throughout the 2007 financial year, driven by a higher
contract customer base and increased usage resulting from refreshed tariff
offerings. In Other Europe, reported service revenue decreased by 7.6%, while
underlying service revenue increased by 4.8% following an increase in the
average mobile customer base, and particularly strong growth in messaging and
data revenue in the Netherlands and Portugal where new tariffs and Vodafone
Mobile Connect data card initiatives proved particularly successful.
Germany and Italy reported declines in service revenue at constant exchange
rates of 3.9% and 1.5%, respectively, largely as a result of termination rate cuts.
Underlying service revenue in Italy grew by 3.6%, with acceleration in the second
half of the year due in particular to increasing messaging and voice volumes,
achieved through new tariffs and offers targeted to specific segments, and despite
the revenue loss incurred in March 2007 following the Italian Government’s
decision to eliminate the top up fee on prepaid cards. In Germany, underlying
service revenue declined slightly as a result of the intensely competitive market
in Germany and the launch of new tariffs in October 2006.
Vodafone Group Plc Annual Report 2008 45