UNITED STATES SECURITIES AND EXCHANGE ... - Vodafone

Operating results continued
India
Service revenue grew by 14.7% (*) for the year, with fourth quarter growth of 6.5% (*)
including a 0.3 percentage point (*) benefit from Indus Towers. The contribution to
India’s revenue growth from Indus Towers for the fourth quarter was lower than in the
third quarter as the fourth quarter represented the first anniversary of significant
revenue being earned from the network sharing joint venture. Mobile service revenue
growth was driven by the increase in the customer base, with record net additions for
the quarter of 9.5 million, partially offset by ongoing competitive pressure on mobile
voice pricing. Customer penetration in the Indian mobile market reached an
estimated 50% at 31 March 2010 representing an increase of 16.0 percentage points
compared to 31 March 2009.
Adjusted EBITDA grew by 9.2% (*) driven by the increased customer base and the
37.6% increase in total mobile minute usage during the year, with costs decreasing
as a percentage of service revenue despite the pressure on pricing. Network
expansion continued with the addition of 9,000 base stations by Indus Towers and an
additional 16,000 by Vodafone Essar.
Other Asia Pacific and Middle East
Service revenue increased by 2.9% (*) driven by the performance of Egypt and Qatar.
In Egypt service revenue grew by 1.3% (*) as pressure on voice pricing and a 1.0%
impact of retrospective mobile termination rate reductions introduced in the fourth
quarter was offset by 31% growth in the average customer base and 64.2% (*) growth
in data and fixed line revenue, with data driven by increased penetration of mobile
internet devices. Having launched services in July 2009, Qatar increased its mobile
customer base to 465,000 customers at 31 March 2010, representing 28% of the
total population.
Adjusted EBITDA declined 4.8% (*) with a similar decline in adjusted EBITDA margin
due to pricing, recessionary pressures and the impact of start-up costs in Qatar offset
in part by efficiency savings.
On 9 June 2009 Vodafone Australia successfully completed its merger with
Hutchison 3G Australia to form a 50:50 joint venture, Vodafone Hutchison Australia
Pty Limited. Since the merger the joint venture has performed well delivering 8%
pro-forma service revenue growth in the fourth quarter and cost synergies to date of
£65 million, in line with management’s expectations.
30 Vodafone Group Plc Annual Report 2010
Verizon Wireless (1)
2010 2009 % change
£m £m £ Organic
Revenue 17,222 14,085 22.3 5.0
Service revenue 15,898 12,862 23.6 6.3
Adjusted EBITDA 6,689 5,543 20.7 4.4
Interest (298) (217) 37.3
Tax (2) (205) (198) 3.5
Non-controlling interests (80) (78) 2.6
Discontinued operations 93 57 63.2
Group’s share of result in
Verizon Wireless 4,112 3,542 16.1 8.0
Notes:
(1) All amounts represent the Group’s share unless otherwise stated.
(2) The Group’s share of the tax attributable to Verizon Wireless relates only to the corporate entities
held by the Verizon Wireless partnership and certain state taxes which are levied on the
partnership. The tax attributable to the Group’s share of the partnership’s pre-tax profit is
included within the Group tax charge.
In the United States Verizon Wireless reported 6.2 million net mobile customer
additions bringing its closing mobile customer base to 92.8 million, up 7.2%. Customer
growth reflected recent market trends towards the prepaid segment alongside
market leading customer churn.
Service revenue growth of 6.3% (*) was driven by the expanding customer base and
robust data revenue derived from growth in multimedia handsets and
smartphones.
The adjusted EBITDA margin remained strong despite the tougher competitive and
economic environment. Efficiencies in operating expenses have been partly offset
by a higher level of customer acquisition and retention costs, particularly for highend
devices including smartphones.
The integration of the recently acquired Alltel business is going according to plan.
Store rebranding is complete and network conversions are well underway and on
track. As part of the regulatory approval for the Alltel acquisition, Verizon Wireless is
required to divest overlapping properties in 105 markets. On 26 April 2010 Verizon
Wireless completed the sale of network and licence assets in 26 markets,
corresponding to 0.9 million customers, to Atlantic Tele-Network for US$0.2 billion.
Verizon Wireless has agreed to sell the network assets and mobile licences in the
remaining 79 markets, corresponding to approximately 1.5 million customers, to
AT&T for US$2.4 billion. This transaction remains subject to receipt of regulatory
approval and is expected to complete by 30 June 2010.