After a year in which its global customer base increased from 53 million customers to a staggering 83 million customers, U.K.-based Vodafone Group plc said it will turn its attention this year from rounding up more subscribers to making money off the ones it already has and solidifying its brand name through its holdings.
The announcement came during the global telecom operator’s annual report, which showed the company’s pre-tax revenue increased from $3 billion last year to $5.7 billion for the fiscal year ending March 31. Total group operating revenue also increased from $3.5 billion to $7.4 billion. But even with dramatic rise in revenues, Vodafone posted a yearly net loss of $9.9 billion, compared with a profit of $1.1 billion last year.
“Following the recent introduction of changes to our commercial policies, the focus in this financial year, as we transition to new data services, will be on continued margin improvement and cash-flow growth, rather than customer growth and market share,” said Chris Gent, chief executive at Vodafone.
Much of the company’s increased customer growth and market share for the past year centered on key acquisitions, including its recent purchase of rival British Telecommunications plc’s share of Japan Telecom Ltd. and Spanish operator Airtel. To help finance those deals, Vodafone sold nearly $5 billion of its own stock. Earlier in its fiscal year, Vodafone received clearance from the European Commission to acquire Germany’s Mannesmann AG, and it contributed its U.S. wireless and paging assets into its partnership in Verizon Wireless, in which it currently owns a 45-percent share.
“These results show the positive benefits of the effective integration of the recent acquisitions of both Mannesmann and AirTouch and the first year of trading for Verizon Wireless,” Gent said. “They also confirm the strong competitive position of [Vodafone], highlighting its diversified global presence, strong funding position and track record of successful execution.”
Vodafone also reiterated plans for an initial public offering of a minority stake in Verizon Wireless pending more favorable market conditions.
During the year, Vodafone also picked up 100-percent ownership of Ireland’s Eircell, a 25-percent stake in Switzerland’s Swisscom Mobile, a 34.5-percent share of Mexico’s Grupo Iusacell, a 40-percent interest in Kenya’s Safaricom, a 2-percent purchase of China Mobile and a 78-percent stake in a consortium awarded a GSM license in Albania.
The company also said its net debt of $9.5 billion represents 5.4 percent of its market capitalization after its payment for third-generation licenses. Vodafone expects to begin rolling out 2.5-generation GPRS services next year in most of its markets and will spend more than $14 billion on next-generation networks over the next five years.
Now that the carrier has its hands in most markets around the world, it wants to concentrate on uniting its interests under the Vodafone name. For those markets where it does not own a majority stake, including Verizon Wireless and Japan Telecom, Vodafone might attempt to persuade the majority owner of the benefits of using the Vodafone name. If that proves unsuccessful, Vodafone could attempt to change its minority interests into a majority one.
“If you want to build a business, you don’t hold your fire. You get started fast,” Gent said.
