Vodafone reaches 200m customers

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Vodafone, the world’s largest mobile phone group, on Wednesday said it had hit 200m customers after organic growth of 6.1 per cent during its third quarter, in line with analysts’ estimates.

The shares rose 2½p in lunchtime London trading to 149½p as investors were reassured by a steady trading statement, which reiterated earlier expectations for full-year results.

The group’s “closing proportionate customer base” was up more than 20 per cent to 198.6m by December 31, including 13.6m users of more sophisticated 3G services.

Since then the number of customers had crossed 200m, said Arun Sarin, chief executive.

“It took us 15 years to get our first 100m customers,” Mr Sarin said. “It took us five years to get the next 100m. There is good momentum in the business.”

The company confirmed that it was still considering the purchase of a controlling stake in India’s Hutchison Essar, a deal which could value the latter at up to $20bn. But it repeated that it was committed to “only pursuing transactions that create value for shareholders and that meet the group’s stated financial investment criteria.”

Some shareholders and analysts are concerned that Vodafone could end up paying too much in its quest to lift its exposure to the fast-growing Indian market.

The Financial Times reported on Monday that Vodafone was hoping to slash capital expenditure at Hutchison Essar, India’s fourth largest mobile operator, which would allow it to meet its self-imposed financial restrictions on deals. Vodafone already has a 10 per cent stake in Bharti Airtel, India’s largest mobile operator.

In its trading statement, Vodafone said reiterated its outlook for the year to March 31, with organic growth in proportionate mobile revenue likely to be between 5 per cent and 6.5 per cent.

The proportionate mobile earnings before interest, tax, depreciation and amortisation (ebitda) margin would be about 1 per cent lower than the previous year on an organic basis.

Europe remained “challenging,” the company said, with proportionate growth of just 0.9 per cent.

While growth trends improved slightly in Italy and the UK, Germany showed an “expected” negative impact from tariff changes introduced in October - when Vodafone cut its prices to counter competition from Deutsche Telekom’s T-Mobile and other operators.

Deutsche Telekom this week made its second profit warning in six months, blaming tough competition in the German market.

However, Vodafone’s “churn” – net losses of customers – had reduced in most major European markets. Vodafone sold stakes in Proximus to Belgacom and Swisscom Mobile to Swisscom during the quarter for a total of £3.1bn.

The EMAPA region (Eastern Europe, Middle East, Asia Pacific and Affiliates) presented a “significant opportunity for growth” with revenues up 14.4 per cent.

Strong markets included Romania (up 29.7 per cent), South Africa (up 22.6 per cent) and Egypt - where the group upped its stake in Vodafone Egypt by 4.8 per cent to 54.9 per cent - up 42 per cent.

In the US, where Vodafone owns a 45 stake in Verizon Wireless, there was record quarterly customer growth of 2.3m net additions, equating to organic service revenue growth of 17.1 per cent for the quarter.

The overall revenue growth of 6.1 per cent for the quarter was within a whisker of analysts’ consensus forecast of 6.2 per cent.

Robert Grindle, an analyst at Dresdner Kleinwort, called the performance “very solid”.

Vodafone shares have gained 28 per cent in the past five months as they recover from a turbulent 2006 in which some shareholders called for Mr Sarin’s resignation.

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