Vodafone reports M2M connections up 47% as group profits fall 2.4% to £11.5bn

Vodafone reports M2M connections up 47% as group profits fall 2.4% to £11.5bn

While Vodafone Group’s adjusted operating profit for the year ended 31 March 2012 fell by 2.4% year-on-year to £11.5 billion (US$18.2 billion), due to the sale of its interest in SFR, the company has seen major growth in M2M connections, notably in the automotive and utilities markets.

On an organic basis, adjusted operating profit was up 2.5%, largely due to a £2.9 billion dividend received from Verizon Wireless (VZW). Group revenue was up 1.2% to £46.4 billion ($73.5 billion), with Group organic service revenue up 1.5% and data revenue up 22.2%.

Machine-to-machine (M2M) platforms, mobile commerce and operator billing, among other new services, are all reported to offer potential for incremental growth. Vodafone says that it has made good progress in all these areas in the last 12 months.

Growth in M2M, driven by the automotive and utilities sectors, has been strong, with the number of M2M SIMs provisioned growing from 5.3 million to 7.8 million year-on-year. In mobile commerce, Vodafone continued to expand M-Pesa, its mobile money transfer service. Total active users now number 14.4 million, and the service is established in six markets. During the year the group launched a trial in Rajasthan in India, with a view to a full launch in the 2012/13 financial year.

The enterprise market offers attractive growth opportunities. Multinationals and smaller companies alike are looking not only to manage costs but also to move to converged platforms and improve mobile connectivity and productivity for their workforces – making the choice of a mobile telecoms provider an increasingly strategic one.

Group enterprise revenue growth was 2.2% and represented 23% of Vodafone’s overall service revenue. Within this, Vodafone Global Enterprise, which serves its largest multinational customers, achieved revenue growth of 11%, driven by customer wins and increased penetration of existing accounts. The group’s broad geographical footprint, further extended through its partner market agreements, is a key differentiator for multinational accounts.

Service revenue growth has, says the company, been driven by a focus on data (+22.2%), enterprise (+2.2%) and emerging markets (India +19.5%, Vodacom (South Africa) +7.1%, Turkey +25.1%).

Vittorio Colao (pictured), group chief executive, comments: “Our focus on the key growth areas of data, emerging markets and enterprise is positioning us well in a difficult macroeconomic environment. Our commercial performance and our ability to leverage scale continue to be strong, enabling us to gain or hold market share in most of our key markets, and reduce the rate of margin decline. Our robust cash generation and the dividend received from Verizon Wireless have enabled us to translate this operational success into good returns for shareholders.

“Our goal over the next three years is to continue to strengthen our technology and commercial platforms through reliable and secure high speed data networks, significantly enhanced customer service across all channels, and improved data pricing models, to enrich customers’ experience and maximise our share of value in the markets in which we operate.”

In the 2013 financial year Vodafone expects to see growth in adjusted operating profit and stability in free cash flow. Adjusted operating profit is expected to be in the range of £11.1 billion to £11.9 billion, reflecting the weaker Euro offset by continued profit growth from VZW.

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