Mixed results for Vodafone as net profits fall

Mobile phone company Vodafone Panafon yesterday reported a sharp jump in revenues for the fiscal year ending March 31, 2003 but ended up with a 4.5 percent drop in net profits as write-offs took some of the shine off its performance. Results appeared to be «mixed compared to our estimates,» Citigroup wrote in a research note, citing the fall in average revenues per user (ARPU) versus the March 2002 figure even as average minutes of use (AMOU) went up. Vodafone Panafon said its revenues rose 27 percent to 1.25 billion euros on the back of a 14 percent rise in the high-margin subscriber market and the inclusion of termination charges for mobile-to-mobile calls. Write-offs related to outdated hardware and software, its erstwhile retail chain e-motion and other investments took net profits down 4.5 percent to 161.7 million euros. Excluding the write-offs, net profits would have increased 10.1 percent. Earnings before interest, tax, depreciation and amortization (EBITDA) rose 13.9 percent to 487.1 million euros. The implementation of mobile-to-mobile termination charges and higher sales of equipment, however, took the EBITDA margin down 4.4 percent to 38.8 percent. The company strengthened its lead in the lucrative contract customer market, increasing the base by 19.3 percent and boosting gross ARPU 7 percent to 30.3 euros and gross AMOU 25 percent to 96 minutes. This helped offset the impact of two tariff cuts in July and December, when rates for contract users were reduced by up to 22 percent in mid-2002 and by up to 30 percent six months later. Tariffs for prepaid users were reduced by 18 percent at the same time. While voice traffic continued to be the growth driver, the strong 22 percent jump in data and short message services revenues pointed to the success of the company’s Vodafone live! camera phone services. Launched in January, the service has since then attracted more than 25,000 subscribers. Vodafone Albania, 49-percent owned by Vodafone Panafon and 51 percent by Vodafone of the UK, posted EBITDA of 18.1 million euros against revenues of 65.3 million euros and a net loss of 5.5 million euros. The company estimated its market share at 42 percent.

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