Vodafone beats estimates

Improved results in several key European markets helped to boost Vodafone’s quarterly sales growth.

London - Wireless carrier Vodafone Group reported quarterly sales growth on its network that beat estimates, helped by improved results in several key European markets.

Organic service revenue, which includes customer fees but excludes handset sales, rose 2.5 percent in the three months through March 31, Newbury, England-based Vodafone said on Tuesday in a statement. Adjusted for one-time factors such as the leap year, service revenue rose 1.8 percent.

Read: Vodafone reaps European rebound

Analysts surveyed by Bloomberg expected 1.5 percent growth, on average. Vodafone advanced 1.5 percent to 226.9 pence at 8.28am in London, after rising as much as 2.7 percent.

Over the last year, Vodafone has trimmed declines in service revenue in European markets such as Germany and Italy. Competition remains tough in the UK, where fixed-line operator BT Group in January completed its acquisition of mobile carrier EE and European Union regulators this month blocked the proposed combination of two other network operators.

Vodafone Chief Executive Officer Vittorio Colao said he expected further jockeying among telecoms companies in the UK after EU Competition Commissioner Margrethe Vestager rejected CK Hutchison Holdings’ $14.5 billion bid for a competitor, Telefonica SA’s O2 unit.

“Of course there will be moving parts in the system,” Colao said in a conference call. “My prediction is that there will be commercial alliances, possibly deals, but it’s very hard to see who with whom.”

Across Europe, telecom companies are scrambling to roll out offers that bundle mobile, broadband, fixed-line telephony and television services. Colao said Vodafone was making progress with its “convergence” strategy, increasing the number of broadband and fixed-line customers.

Vodafone and cable provider Liberty Global in February agreed to pool their businesses in the Netherlands. The companies previously failed to agree on a broader business combination, people familiar with the situation have said.

Colao said Vestager was right to block Hutchison’s deal for O2, saying it could have lessened competition and created complications for network-sharing agreements like the one that Vodafone has with O2.

“It’s good to have consolidation but it should not come at the cost of lower competition,” he said.

For the full fiscal year ended in March, Vodafone posted earnings before interest, taxes, depreciation and amortisation of 11.6 billion pounds ($16.8 billion), below analyst expectations of 11.7 billion pounds.

For the current fiscal year, Vodafone forecast EBITDA in a range of 12.4 billion pounds to 12.8 billion pounds.

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