Vodafone's sales drop but group revenue rises

Vodafone has guided for adjusted operating profit of between 11-11.8 billion for its fiscal year ending March 2010, after making 11.8 billion in its last fiscal year.

Chief financial officer Andy Halford told journalists on a call: "We are very comfortable still with our guidance range. Nothing surprised us in the first-quarter numbers."

Vodafone added eight million customers in the quarter, taking its proportionate customer base to 315 million. Verizon Wireless, its US joint venture with Verizon Communications, had 1.1 million net customer additions.

Free cash flow rose 21 per cent to 1.896 billion, while the company's net debt on 30 June stood at 31.2 billion.

Squeezing the pips

Vodafone's revenues were also hit in some markets including much of Europe, where it makes about two-thirds of its sales, by regulator cuts to mobile termination rates, which operators charge each other to connect incoming calls. These now account for about 12 per cent of Vodafone's sales.

Like all carriers, Vodafone is struggling to milk more revenue out of saturated markets in Europe and North America. It has branched out ambitiously into India and parts of Africa, where many people have yet to buy their first phone.

Vodafone's South African sales grew 5.2 per cent on an organic basis, but the rest of Africa was patchier, with Egypt strong but Democratic Republic of Congo and Tanzania weak.

Vodafone said the focus was on squeezing more out of markets in which it is already present, and not on entering new markets.

"Our primary focus is on squeezing all the pips we can out of our businesses," Halford said. "Over a period of time, we may cautiously look at other things."

Speculation has been rife that Vodafone, among others, may be interested in acquiring parts of Kuwaiti mobile operator Zain's African operations, which Zain is considering selling.