Vodafone 2016 Annual Report Download - page 167

Overview Strategy review Performance Governance Financials Additional information
Vodafone Group Plc
Annual Report 2016
165
Italy
Service revenue declined 10.2%*. Trends in both mobile and xed
improved in H2, and Q4 service revenue declined 4.1%*.
Mobile service revenue fell 12.1%* as a result of a decline in the prepaid
customer base and lower ARPU following last year’s price cuts. We took
a number of measures to stabilise ARPU during the year, and in Q4,
consumer prepaid ARPU was up 6% year-on-year. We also began
to take a more active stance on stabilising the customer base in the
second half of the year, in what remains a very competitive market.
Enterprise performed strongly, returning to growth in H2. We now have
4G coverage of 84%, and 2.8 million 4G customers at 31 March 2015.
Fixed service revenue was up 1.3%*. Broadband revenue continued
to grow and we added 134,000 broadband customers over the year,
but overall growth was partially offset by an ongoing decline in xed
voice usage. We accelerated our bre roll-out plans in H2, and by March
2015 we had installed more than 5,000 cabinets.
EBITDA declined 15.3%*, with a 2.4* percentage point decline in EBITDA
margin. The decline in service revenue was partially offset by continued
strong cost control, with operating expenses down 3.1%* and customer
investment down 3.0%*.
UK
Service revenue fell 1.8%* as a good performance in consumer mobile
was offset by a decline in xed. The UK returned to service revenue
growth in H2. Q4 service revenue was up 0.6%*.
Mobile service revenue grew 0.5%*. Consumer contract service
revenue grew strongly, supported by customer growth and a successful
commercial strategy bundling content with 4G. Enterprise mobile
revenue returned to growth in H2, as a result of growing data demand.
During the year we acquired 139 stores from the administrator
of Phones 4U, taking our total portfolio to over 500 and accelerating
our direct distribution strategy. 4G coverage reached 63% at 31 March
2015 (or 71% based on the OFCOM denition), and we had 3.0 million 4G
customers at the year end.
Fixed service revenue declined 9.1%*, excluding the one-off
benet of a settlement with another network operator in Q4.
Underlying performance improved from -11.3%* in H1 to -6.8%* in H2,
driven by a strong pick-up in carrier services revenue and improving
enterprise pipeline conversion. We plan to launch our consumer bre
broadband proposition in the coming weeks.
EBITDA declined 12.4%*, with a 2.4* percentage point decline in EBITDA
margin due mainly to a reclassication of some central costs to the
UK business. Reported EBITDA beneted from one-off settlements with
two network operators.
Spain
Service revenue declined 10.9%* excluding Ono, as growth in xed
continued to be offset by price pressure in mobile and converged
services. Q4 service revenue growth was -7.8%*. Ono Q4 local currency
revenue growth was -1.9% excluding wholesale.
Mobile service revenue fell 12.7%*, although there was some
improvement in H2 with the contract customer base stabilising year-on-
year. However, ARPU continued to be under pressure throughout the
year as a result of aggressive convergence offers. During H2, we saw
an increase in the take-up of handset nancing arrangements as a result
of a change in the commercial model. We reduced handset subsidies
in Q4 and introduced bigger data allowances at slightly higher price
points. Our 4G network roll-out has now reached 75% population
coverage, and we had 2.9 million 4G customers at March 2015.
We continue to lead the market in net promoter scores (‘NPS’) in both
consumer and enterprise.
Fixed service revenue rose 7.8%* excluding Ono, supported
by consistently strong broadband net additions. Since its acquisition
in July 2014, Ono contributed £699 million to service revenue and
£267 million to EBITDA. Including our joint bre network build with
Orange, we now reach 8.5 million premises with bre. We have made
good progress with the integration of Ono, and launched in April 2015
a fully converged service, “Vodafone One”, a new ultra high-speed xed
broadband service with Ono Fibre, home landline, 4G mobile telephony
and Vodafone TV.
EBITDA declined 29.5%* year-on-year, with a 4.9* percentage point
decline in EBITDA margin. The margin was impacted by falling mobile
service revenue and growth in lower margin xed revenue, partially
offset by lower direct costs and operating expenses, and the change
in the commercial model described above.
Other Europe
Service revenue declined 2.2%* due to price competition, the generally
weak macroeconomic environment and MTR cuts.
Again, we saw a recovery in H2, with Q3 service revenue -1.1%*
and Q4 service revenue -0.9%*. Hungary grew by 8.6%* for the full
year, the Netherlands and Czech Republic returned to growth in H2,
and Greece and Ireland showed a clear improvement in trends over
the year.
In the Netherlands, we have nationwide 4G coverage, and the return
to growth has been driven by continued contract customer growth,
stabilising ARPU and growth in xed revenue. In Portugal, we continue
to see a decline in mobile service revenue driven by convergence
pricing pressure reecting a prolonged period of intense competition,
partially offset by strong xed revenue growth. We now reach 1.6 million
homes with bre, including our network sharing deal with Portugal
Telecom. In Ireland, 4G coverage has reached 87%, and we have begun
trials on our FTTH roll-out, with a commercial launch planned for later
in 2015. In Greece, the steady recovery in revenue trends through
the year stalled in Q4 as a result of the worsening macroeconomic
conditions. The integration of Hellas Online is continuing in line
with expectations.
EBITDA declined 2.8%*, with a 0.1* percentage point increase in EBITDA
margin, as the impact of lower service revenue was largely offset
by strong cost control.