By Paul Sandle
LONDON (Reuters) - Vodafone (LON:VOD)
said its recovery would accelerate this year after investment in faster
networks boosted demand in Europe and helped the group return to
underlying revenue and core earnings growth for the first time since
2008.
Chief Executive Vittorio Colao said a strong year for the
world's second mobile operator had been capped by a recovery in the
final quarter in Europe, its largest region which has taken more than
five years to nurse back to health.
"We achieved the first quarter of positive revenue growth in Europe since December 2010," he said on Tuesday.
In Germany, Vodafone was "back in game" against former incumbent Deutsche Telekom (DE:DTEGn), while Italy, another laggard, also recovered in the final quarter, he said.
Its
performance in its home market was marred by problems with a new
billing system. Colao said the business should be back to normal in the
second half of the year.
The company has been spared the drop to fourth place in the consumer market in Britain after Europe on May 11.
Colao
said the European Commission had no choice but to block the merger
between rivals Telefonica's O2 and Hutchison's Three because they were
in separate network sharing agreements with Vodafone and market leader
BT's EE.
The ruling does not bring any certainty to the market, with the future of both companies in Britain in doubt.
"My sense is that there will be commercial alliances, possibly deals," he said.
NETWORK UPGRADE
Vodafone
has spent 19 billion pounds ($27.51 billion) on Project Spring, a
program that has brought 4G speeds to 87 percent of its European
footprint, built more fixed-line fiber and extended 3G coverage in
emerging markets such as India.
Colao said the group had 47
million customers on faster 4G networks across 21 countries, and on
average they were using twice as much data as they were on 3G networks.
"Price is coming down, but people are spending more," he said. "It's a win-win for consumers and for the company."
Vodafone
reported earnings before interest, tax, depreciation and amortization
of 11.6 billion pounds for the year to end-March, slightly shy of
forecasts but up 2.7 percent and said it expected this rate to
accelerate to 3-6 percent this year.
"I am confident we will
sustain our positive momentum in the coming year, allowing us to
maintain attractive returns for our shareholders," Colao said.
Capital
expenditure will fall after the end of Project Spring, but not as much
as had been forecast, to the mid-teens as a percentage of revenue rather
than 13-14 percent.
Shares in Vodafone, which have fallen 2
percent in the last 12 months against a 11 percent decline for the
European sector, were up 2.4 percent at 229 pence at 1030 GMT.
Analysts
at Citi said Vodafone's improving core earnings momentum should be met
positively, although the raised capex outlook, and its likely impact on
free cash flow and dividends would offset that.
Vodafone reported
full-year revenue of 41 billion pounds, up 2.3 percent on an underlying
basis. It raised its final dividend by 2.0 percent to 7.77 pence.
