http://www.morningstar.com/earnings/54520933-vodafone-group-plc-vod-q1-2014.aspx

Vodafone Group PLC VOD
Q1 2014 Earnings Call Transcript

Transcript Call Date 07/19/2013

Operator: Good morning, ladies and gentlemen and welcome to the Vodafone Group Conference Call. Today's call is hosted by Andy Halford, Chief financial officer at Vodafone. Please go ahead Mr. Halford.

Andy Halford - CFO: Good morning, and welcome to Vodafone's interim management statement for the first quarter. I'll take you through the financial highlights before handing over to Vittorio, who will update you on strategic developments, we'll then move to Q&A and for that we're joined by Philipp, Paolo and Nick.

Let me start on Slide 3, highlights for the quarter, Group organic service revenue was down 3.5% on our normal accounting basis or down 1.3% under the new statutory accounting basis, which excludes joint ventures like Italy. We've included both sets of numbers in today's press release, but I'll focus in this presentation on the numbers that include our joint ventures as I believe that that fairly represents the underlying operational performance of the Group.

The 3.5% decline was a slight improvement on the previous quarter. However, excluding the Leap Year benefit in Q4, our performance deteriorated slightly, partly due to MTRs. We continue to see strong growth in our emerging markets with India up 13.8%, Turkey up 15.5% and Vodacom up 3.2% however this was offset by conditions in Europe.

In the Verizon Wireless continued to perform strongly with service revenue growth of 7.2%, driven by strong growth in number of accounts and average revenue per account.

On Vodafone Red, we have now launched it in 16 countries and have 5.2 million customers. This is helping to drive in-bundle mobile customer revenue, which for the Group was up 9.5% year-on-year.

We've made strong progress in our unified communications strategy, having recently announced our proposed acquisition of Kabel Deutschland in Germany and we have signed an agreement to share vertical fibre infrastructure in Spain.

This week, we also announced through a wholesale access agreement in Italy. We will launch fibre base propositions in 27 cities by the end of this summer.

Net debt for the quarter fell to GBP24.9 billion, which is primarily driven by the receipts of the GBP2.1 billion dividend from Verizon Wireless. We now have completed the GBP1.5 billion share buyback.

On Slide 4, we have split out the overall revenue trends by region. In Northern and Central Europe, service revenues declined by 3% and in Southern Europe by 14.4%, reflecting continued economic and regulatory pressures and increased competition in some markets.

AMAP, which primarily comprises of our emerging markets continue to grow strongly at 5.9% with good growth in customer numbers, data and a more supported pricing environment, particularly in India. I'll go into more detail on each of these regions shortly.

Excluding MTRs, Group service revenues including joint ventures declined 0.7%. It's worth noting at this point that for Q2 we expect a similar MTR headwind with further cuts in Spain, Turkey and the Netherlands, offset by lapping effects in Italy.

CapEx for the quarter was GBP1.2 billion and free cash flow was GBP1 billion or GBP3.1 billion including the dividend received from Verizon Wireless.

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