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in gross upgrades. Other costs remained relatively stable compared to the six months ended 30 September
2003.
The commencement of depreciation and amortisation on the 3G network and licence, following launch of services
in the second half of the previous financial year, impacted operating profit before goodwill amortisation, with the
licence amortisation representing the largest share of this increase.
Vodafone Germany has agreed to reduce its mobile call termination rate with Deutsche Telekom for incoming
calls from Deutsche Telekom fixed lines by 23% over two years, from 14.3 eurocents per minute to 13.2
eurocents in December 2004 and to 11.0 eurocents in December 2005, subject to regulatory approval.
Other Northern Europe
Proportionate customers for the Group’s other operations in the Northern Europe region increased by 6% in the
six month period to 30 September 2004.
Turnover increased marginally in spite of the strengthening of Sterling against local currencies. Vodafone
Netherlands and Vodafone Sweden reported stable turnover when measured in local currency despite
competitive pressures on pricing and imposed termination rate reductions. Vodafone Hungary continued to grow
strongly, increasing turnover by 38% in local currency, as a result of an ARPU uplift and an enlarged customer
base.
Operating profit before goodwill amortisation decreased, principally as a result of a decline in the profitability of
Vodafone Sweden, due to significantly higher operating expenses and depreciation charges, following the
continuing cost of developing the 3G network which was launched in July 2004, and increased acquisition and
retention costs as competition intensified. In the Netherlands, operating profit before goodwill amortisation
increased as a result of a release of a provision, following a successful appeal reducing a fine imposed by the
Dutch Competition Authority on mobile operators for a breach of the Dutch Competition Act. The effect of this
release was partially offset by a rise in customer acquisition costs. SFR reported strong revenue growth as a
result of a 7% increase in the average customer base over the prior period and improved usage of voice and nonvoice
services, including Vodafone live! which had 1.4 million SFR customers at 30 September 2004. The
Group’s share of the operating profit before goodwill amortisation of SFR increased following this revenue growth
and an improved operating margin.
On 24 September 2004, the Group entered into a sale and purchase agreement to acquire the remaining 7.2%
shareholding in Vodafone Hungary from Antenna Hungaria Rt. The sale is due to be completed on or before 31
December 2004, subject to certain conditions.
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