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Bloomberg
Vodafone Group Plc reaped a payoff from its network build-out in Europe, taking the rare step of raising its profit forecast as customers choose costlier data plans.
The shares rose after the carrier almost doubled its outlook for earnings growth and reported second-quarter results that beat expectations on strength in most markets. Vodafone is benefiting as consumers opt for its mobile networks instead of Wi-Fi, from expansions in its fixed broadband and enterprise businesses as well as cost cuts, executives said on Tuesday.
Vodafone now expects earnings before interest, taxes, depreciation and amortisation to increase about 10 percent in its fiscal 2018 year, from 4 percent to 8 percent previously, the Newbury, England-based company said in a statement. The stock jumped as much as 5.3 percent, the most since May 2015, and was up 5 percent to 226.85 pence at 9:48 am in London.
Shareholders have been seeking better prospects in Europe, where the carrier generates more than 70 percent of its revenue, and progress in India, where Vodafone is overhauling its money-losing business. At home in the UK, Vodafone is introducing more flexible wireless packages to win new subscribers and is backing a fiber broadband roll-out to compete with BT Group Plc’s Openreach network and Liberty Global Plc’s Virgin Media.
“This is really robust underlying performance through the year,†Chief Executive
Vittorio Colao said. Organic service revenue expanded 1.3 percent in the period ended on September 30, as a turnaround taking hold in the UK and gains across Europe helped offset the end of retail roaming charges. That compared with the 1.4 percent average of three analyst estimates compiled by Bloomberg, for the measure of sales from customer plans and network traffic, excluding handset sales. First-half Ebitda of $8.67 billion beat analysts’ estimates for 7.09 billion euros.
“Vodafone is executing well on strategy, especially in terms of cutting costs, and revenue growth is recovering thanks to the potential in the broadband and enterprise markets,†Stephane Beyazian, an analyst said.