Vodafone, Too, Sees User Growth
By Carlo Longino, Mon Jul 26 23:30:00 GMT 2004

The carrier continues the industry-wide growth trend, adding nearly 6 million users worldwide in its fiscal first quarter.

Vodafone's subscriber numbers leapt by 4.3 percent up to 139.2 million in the quarter, though 2.7 million of those were from increasing the company's ownership of its Japanese units. While the organic growth outpaced expectations, any slowdown will hit revenues if this quarter's ARPU trends continue.

Average revenue per user grew in the UK (helped by the purchase of a service provider), fell slightly in Italy and Germany and dropped in Japan. Data, however, grew to 16.3% of service revenues from 15% a year ago -- a healthy metric for a carrier looking to capitalize on declining voice revenue as well as start generating returns on its huge 3G investments -- and the company says it will be up to 20 percent by March 2005. There are also now 9 million users of the Vodafone live! content platform.

Japan is still an area of significant concern. Service revenue fell 6 percent compared to last year, though only 1 percent from the quarter ended in March. The company says it won't be until December that new handsets it hopes will help stem the tide will be available.

CEO Arun Sarin didn't do much to calm the jittery nerves of investors worried the carrier might go on another acquisition binge to grow subscribers and revenues. The company has said it will return roughly GBP 3.5 billion of its expected free cash flow to shareholders this year, though it's still interested in buying the 56% of French carrier SFR it doesn't own from Vivendi. Sarin also stayed quiet about plans for the US, where Vodafone owns 44% of Verizon Wireless, after trying to acquire AT&T Wireless earlier this year.

Vodafone, the world's biggest carrier by revenues, didn't report revenue or earnings figures, as it only makes half-yearly full reports, issuing "key performance indicator" data at the end of its fiscal first and third quarters.