During the third quarter Vodafone said that it achieved organic growth of 6.1% in proportionate mobile revenue. It also added 8.7 million customers during the three months to Christmas, versus analysts’ expectations of 7.5 million. This gave Vodafone a total proportionate customer base of 198.6 million, with over 200 million at the end of January.
This 20% rise in customers during the last quarter, was mostly down to the emerging markets. Europe recorded 3.2 million proportionate organic net customer additions, while EMAPA (Eastern Europe; Middle East, Africa & Asia; Pacific; and other associates) added 5.6 million customer additions.
Vodafone is benefiting from its presence in Turkey, Egypt, South Africa, and the US, all contributing good customer growth levels. This is critically important to the Newbury, UK-based operator as it faces heavily saturated markets in Europe.
To this end, Vodafone has made clear its intension of acquiring the 67% stake in Hutchison Essar Ltd, India’s second-ranked GSM operator, and is conducting due diligence on a possible deal. If successful, Vodafone would be able to add Essar’s 23 million customers to its total client base.
But it faces competition for these customers, notably from Reliance Communications Ltd (formerly Reliance Infocomm), The Essar Group, as well as The Hinduja group, who are all interested in the stake.
Also, there is some concern that ARPU levels from Indian customers will be on the low side, meaning that Vodafone’s margins in this market, if it were successful in acquiring the stake, would be wafer-thin.
Vodafone continues to stress that it will not overbid for the Essar stake, and chief executive Arun Sarin will have to tread carefully to avoid damaging his carefully restored reputation with Vodafone investors and shareholders.
Shares in Vodafone closed up 0.68% at 148 pence ($2.90) on the London Stock Exchange on Wednesday.
Looking forward, Vodafone also pleased the markets by sticking its outlook for the year ending 31 March 2007. It still expects organic growth in proportionate mobile revenue is expected to be in the range of 5% to 6.5%. The proportionate mobile EBITDA margin is expected to be around 1% point lower than the year ending 31 March 2006 on an organic basis.
