Vodafone logs first annual growth in eight years

British telecoms giant Vodafone on Tuesday posted its first annual rise in operating profits in eight years, boosted by growth in Europe and emerging markets. 

Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 2.7% to £11.6 billion ($16.7 billion, 14.7 billion euros) in the year to March, Vodafone said in a results statement.

That was broadly in line with expectations of £11.7 billion, according to analysts polled by Bloomberg.

Revenue on an organic basis, which strips out the impact of takeover activity and currency fluctuations, rose 2.3% to £40.97 billion. The upbeat figures sent the company`s share price rising 2.3% to 228.85 pence on London`s benchmark FTSE 100 index, which was up 0.4%.

Vodafone however faced a net loss of almost £4.0 billion last year, owing to a large accounting charge linked to the tax treatment of a revaluation of assets in Luxumbourg. That contrasted with profit after tax of nearly £5.8 billion in the previous financial year.

"This has been a year of strong execution for the group, returning to organic growth in both revenue and EBITDA for the first time since 2008," chief executive Vittorio Colao said in the earnings release.

Growth was aided by its operations in Europe, as well as Africa, Middle East and Asia Pacific (AMAP), while its performance was buoyed also by cost-cutting.

"We achieved the first quarter of positive revenue growth in Europe since December 2010 while growth in AMAP accelerated with strong performance in South Africa, Turkey and Egypt," Colao said.

"EBITDA margins also grew year-on-year, supported by our cost efficiency programmes."

'Commercial alliances' 

Colao, speaking to reporters on a conference call, said he expected further jockeying among telecoms companies in Britain after the European Commission blocked Spanish giant Telefonica`s blockbuster sale of British telecom giant O2 to Hong Kong group Hutchison on competition fears.

"My prediction is that there will be commercial alliances, possibly deals, but it`s very hard to see who with whom," Colao said.  He praised Brussels for blocking Hutchison’s mega-deal. "It’s good to have consolidation but it should not come at the cost of lower competition."

Competition remains tough in Britain amid rapid consolidation in the sector. Telecoms and television broadcasting firm BT Group snapped up mobile operator EE last year in a deal that completed in January.

Turning to the outlook, Vodafone forecast EBITDA in a range between £12.4 billion and £12.8 billion this year.  Vodafone will however switch to reporting in euros in the current financial year which runs until March 2017.