Vodafone 2010 Annual Report Download - page 29

Performance
Vodafone Group Plc Annual Report 2010 27
Europe(1)
Germany Italy Spain UK Other Eliminations Europe % change
£m £m £m £m £m £m £m £Organic
Year ended 31 March 2010
Revenue 8,008 6,027 5,713 5,025 5,354 (249) 29,878 0.8 (4.1)
Service revenue 7,722 5,780 5,298 4,711 5,046 (247) 28,310 1.5 (3.5)
EBITDA 3,122 2,843 1,956 1,141 1,865 – 10,927 (2.0) (7. 3)
Adjusted operating profit 1,695 2,107 1,310 155 1,651 – 6,918 (2.9) (8.9)
EBITDA margin 39.0% 47.2% 34.2% 22.7% 34.8% 36.6%
Year ended 31 March 2009
Revenue 7,847 5,547 5,812 5,392 5,329 (293) 29,634
Service revenue 7,535 5,347 5,356 4,912 5,029 (293) 27,886
EBITDA 3,225 2,565 2,034 1,368 1,957 – 11,149
Adjusted operating profit 1,835 1,839 1,421 328 1,702 – 7,125
EBITDA margin 41.1% 46.2% 35.0% 25.4% 36.7% 37.6%
Note:
(1) The Group revised how it determines and discloses segmental EBITDA and adjusted operating profit during the year. See note 3 to the consolidated financial statements.
Revenue increased by 0.8% benefiting from exchange rate movements. On an
organic basis service revenue declined by 3.5%(*) reflecting reductions in most
markets partially offset by growth in Italy and the Netherlands. The decline was
primarily driven by reduced voice revenue resulting from continued market and
regulatory pressure on pricing and slower usage growth as a result of the challenging
economic climate. This was partially offset by growth in data and fixed line revenue.
EBITDA decreased by 2.0% resulting from an organic decline partially offset by a
positive contribution from foreign exchange rate movements. On an organic basis,
EBITDA decreased by 7.3%(*) resulting from a decline in organic service revenue in
most markets and increased customer investment partially offset by operating and
direct cost savings. The EBITDA margin declined 1.0 percentage point.
Organic M&A Foreign Reported
change activity exchange change
%pps pps %
Revenue – Europe (4.1) 0.1 4.8 0.8
Service revenue
Germany (3.5) – 6.0 2.5
Italy 1.9 – 6.2 8.1
Spain (7.0) – 5.9 (1.1)
UK (4.7) 0.6 – (4.1)
Other (5.4) – 5.7 0.3
Europe (3.5) 0.1 4.9 1.5
EBITDA
Germany (8.9) – 5.7 (3.2)
Italy 4.3 – 6.5 10.8
Spain (9.9) – 6.1 (3.8)
UK (17.7) 1.1 – (16.6)
Other (10.2) – 5.5 (4.7)
Europe (7.3) 0.1 5.2 (2.0)
Adjusted operating profit
Germany (13.2) (0.1) 5.7 (7.6)
Italy 7.8 – 6.8 14.6
Spain (13.8) – 6.0 (7.8)
UK (58.3) 5.6 – (52.7)
Other (9.3) 0.2 6.1 (3.0)
Europe (8.9) 0.2 5.8 (2.9)
Germany
Service revenue declined by 3.5%(*) driven by a 5.0%(*) reduction in mobile revenue
partly offset by a 1.3%(*) improvement in fixed line revenue. The mobile revenue
decline was driven by a decrease in voice revenue impacted by a termination rate cut
effective from April 2009, reduced roaming, competitive pressure and continued
tariff optimisation by customers. The service revenue decline in the fourth quarter
slowed to 1.6%(*) with mobile revenue declining 1.8%(*) driven by the acceleration in
data growth and improved usage trends. Data revenue benefited from an increase in
Superflat Internet tariff penetration to over 500,000 customers, a 46% increase in
smartphones and an 85% increase in active Vodafone Mobile Connect cards
compared with the previous year.
Fixed line revenue growth of 1.3%(*) was supported by a 0.4 million increase in fixed
broadband customers to 3.5 million at 31 March 2010 and a 0.2 million increase in
wholesale fixed broadband customers to 0.4 million at 31 March 2010.
EBITDA declined by 8.9%(*) driven by lower service revenue and investment
in customer acquisition and retention offset in part by lower interconnect costs
and a reduction of operating expenses principally from fixed and mobile
integration synergies.
Italy
Service revenue growth was 1.9%(*) with strong growth in data revenue, driven by
higher penetration of PC connectivity devices and mobile internet services, and fixed
revenue. The continued success of dual branding led to a closing fixed broadband
customer base of 1.3 million on a 100% basis. Increased regulatory, economic and
competitive pressures led to the fall in voice revenue partially mitigated through
initiatives to stimulate customer spending and the continued growth in high value
contract customers. Mobile contract customer additions were strong both in
consumer and enterprise segments and the closing contract customer base was up
by 14.5%.
EBITDA increased by 4.3%(*) and EBITDA margin increased by 1.0 percentage point as
a result of increased revenue, continued operational efficiencies and cost control.
Spain
Full year service revenue declined by 7.0%(*) primarily due to a decline in voice
revenue which was driven by continued intense competition and economic
weakness, including high unemployment, termination rate cuts effective from April
and October 2009 and increased involuntary churn. In the fourth quarter the service
revenue decline improved to 6.2%(*) as voice usage increased due to further
penetration of our flat rate tariffs and fixed line revenue continued to grow with 0.6
million fixed broadband customers by the end of the financial year.
EBITDA declined 9.9%(*) and the EBITDA margin decreased by 0.8 percentage points
as the decline in service revenue, the increase in commercial costs and the
dilutive effect of lower margin fixed line services more than offset the reduction in
overhead costs.