Vodafone 2011 Annual Report Download - page 43

Vodafone Group Plc Annual Report 2011 41
Performance
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.
UK
Service revenue declined by 4.7%(*) with lower voice revenue primarily due
to a mobile termination rate reduction effective from July 2009, continued
intense competition and economic pressures resulting in customers
optimising bundle usage and lower roaming revenue. These were partially
offset by higher messaging revenue, strong growth in data revenue driven
by the success of mobile internet bundles and higher wholesale revenue
derived from existing MVNO agreements. The decline in the fourth quarter
slowed to 2.6%(*) driven by higher data growth and the impact of mobile
customer additions achieved through the launch of new products and
expanded indirect distribution channels.
The 17.7%(*) decline in EBITDA was primarily due to lower service revenue
and increased customer investment partially offset by cost efficiency
initiatives, including streamlined processes, outsourcing and reductions in
publicity and consultancy.
Revenue increased by 0.2% benefiting from exchange rate movements. On
an organic basis service revenue declined by 3.8%(*) reflecting reductions in
most markets partially offset by growth in Italy, Turkey 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 3.9% resulting from an organic decline partially offset
by a positive contribution from foreign exchange rate movements. On an
organic basis, EBITDA decreased by 8.9%(*) 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 1.5 percentage points.
Organic M&A Foreign Reported
change activity exchange change
% pps pps %
Revenue – Europe (4.5) 0.1 4.6 0.2
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 (6.0) – 4.4 (1.6)
Europe (3.8) 0.1 4.6 0.9
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 (16.0) – 4.4 (11.6)
Europe (8.9) 0.1 4.9 (3.9)
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 (27.7) – 4.8 (22.9)
Europe (12.6) 0.1 5.5 (7.0)
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.