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4G Mobile data suck stiffens Vodafone revenues

We will milk our users not churn them, pledges Colao

Vodafone has seen an increase in its UK revenues of almost one per cent during the fourth quarter of 2014, prompted by users gradually moving to 4G and spending more on data.

Revenue in the fourth quarter of 2013 was £1,518m, rising to the princely sum of £1,532m for the end of 2014, the mobile giant's first UK revenue rise for three years, and forming part of a better-than-expected set of financials for one of the most well known names in mobile technology.

“We've achieved another quarter of improving revenue trends in most of our major markets," said Vittorio Colao, Vodafone Group chief exec. "In Europe, improved commercial execution in both mobile and fixed over the last few quarters ... is supporting the steady recovery in the top line."

Group revenue was £10.9bn, while Group Service revenue was £9.8bn, albeit the latter figure actually represents a small decline on the year.

However, remove the mobile termination rate (MTR) cuts imposed on the company by the regulator (forcing a price cut for other networks for handling their calls), and the operator's Group Service revenue grew by 0.2 per cent.

As the MTR cut is not a reflection of people spending less or increased competition it bodes well for future profits.

Across the company's many European operations, organic service revenue declined 2.7 per cent, excluding the impact of MTR cuts. However, the company reported seeing the ARPU benefits of "4G migration, and increased data usage ... and now has 10.1 million 4G customers across Europe".

“Our Project Spring investment programme is well advanced, with 4G coverage in Europe now 65 per cent, dropped call rates down to 0.64 per cent, and 26 million homes now passed by our own next generation networks," added Colao. "We're confident that, over time, this will translate into further improvements in ARPU and churn.”

Vodafone didn’t give a figure for the number of 4G subscribers in the UK but said that 4G was now available in 18 markets, with 13.7 million 4G customers across the Group.

It did not disclose earnings figures.

On the back of these figures Vodafone said it confirmed the full-year guidance of EBITDA at £11.6bn-£11.9bn, and a free cash flow positive situation after all capex, although the guidance excludes the acquisition of Spain's Ono.

With major changes ahead, and all the UK rivals playing musical chairs and moves into fourplay, it would be foolish to look too far ahead. ®

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