By Yankee Group
Tuesday, November 10, 2009
Vodafone announced its half-year results today. Wait, don’t go, they were interesting.
I’ll spare you the financial details. Ok I can’t resist. Overall there were no big surprises. Organic revenues were down 3% yoy and group EBITDA declined by almost 8%. Full-year guidance was reiterated.
The headlines were uninspiring, but this morning’s results presentation, hosted by Chief Executive Vittorio Colao, threw up a few interesting snippets regarding the company’s operational performance. They provide a useful snapshot of what’s going on at Vodafone, but they also have implications for other players. Hope you like numbers:
- Average price per minute down 10%. Ouch! Definitely some price plan optimization going on there – that’s operator speak for consumers using every last voice minute and text message in their price plan bundles.
- Roaming revenue down 14% – that’s businesses cutting costs during the recession – by happy coincidence Vodafone’s own travel expenses are also down 14%.
- Enterprise revenues down 5% – more cost-cutting. See the trend?
- Fixed broadband up 9% – that’s Vodafone playing catch up with other more established converged service providers like Orange.
- PC connectivity revenues up 21% and consumer mobile Internet revenues up 30% (with a whopping 73% increase in the UK – just wait ‘til Vodafone’s UK customers get the iPhone).
- 30% of Vodafone’s active customers use data services (at least monthly), but only 10% subscribe to a data plan (see the opportunity?)
- 20% of Vodafone’s new handset sales in Europe are Smartphones. It expects this to increase to 30-40% next year (it’s already approximately 40% in the U.S.). Wow – the U.S. leading Europe on a key mobile market metric – stop the presses.
- Here’s one for the engineers among you – only 5% of Vodafone’s cell sites are operating at more than 90% of capacity during busy hours. The company believes HSPA+ will meet its needs for the next 2-3 years. It will also achieve better capital efficiency through cost savings – 55% of new sites in Europe are already shared. So, no rush to LTE then?
- Let’s finish with a big number. Vodafone also announced today that it’s targeting £1bn in additional cost savings by March 2012.
So, what do all these numbers mean? Here’s one interpretation. There’s no voice revenue growth in mature markets (I guess we knew that). Data is where it’s at (knew that too?). The pipes must get fatter and more efficient (Mr Colao’s term – not mine) to cope with future smart-phone-driven data demand. Operators (well, Vodafone anyway) are still operating well under capacity. No data crunch coming? Operators can sell lots more data plans to consumers, which means it will be several years before the data business goes ex-growth – by which time Vittorio will be sipping on something pleasant on a Mediterranean beach. Before then, he’ll take great pleasure in cutting Vodafone’s costs to the bone. That’s what I think the numbers say. What do you think?
SOURCE