Vodafone plans Capex of £6.26 billion in FY 2014, announces network strategy

Telecom Lead Europe: Vodafone Group plc is planning a Capex (capital expenditure) of around £6.26 billion in FY 2014.

This means, Vodafone’s global Capex will be almost steady in constant currency for the current financial year.

Vodafone’s Capex decreased marginally to £6.26 billion in FY 2013 from £6.36 billion in FY 2012.

Vodafone India’s Capex decreased substantially to £554 million in FY 2013 from £805 million in FY 2012.

Meanwhile, Vodafone India has posted 10.7 percent increase in FY 2013 service revenue to £4.29 billion.

Vodafone CEO Vittorio Colao says its network strategy continues to focus on supporting higher speed data in both mature and emerging markets, and delivering a excellent data experience to its customers by deploying HSPA+, LTE and high capacity backhaul.

“We expect to continue our consistent level of investment so that Vodafone customers can be assured of a video-standard data service across our footprint in Europe and we can manage the high growth in data volumes anticipated. We aim to extend our 3G footprint at 43.2 Mbps and LTE coverage across our five major European markets to 80 percent and 40 percent respectively by March 2015,” Colao said.

To complement its physical infrastructure investment, Vodafone aims at securing low frequency spectrum to maintain and improve our strong market positions through the improved customer experience this will offer.

In FY 2013, Vodafone acquired spectrum in the important 800 MHz band in the UK, the Netherlands, Ireland, Romania and in the 1800 MHz band in India, taking its total spectrum investment to £7.9 billion in the last four years.

Over the next three years, Vodafone plans to simplify its business model both across and within countries, eliminating legacy structures, reducing non customer-facing costs and moving towards more standardized offerings.

This will enable Vodafone to maximize the benefits of its scale and share commercial, technical and support functions across geographies in Europe, and to speed up and co-ordinate its time to market for new propositions and services.

Vodafone sees a significant opportunity in unifying network and IT management across multiple markets, in further centralizing and standardizing procurement, and in offshoring more business functions to shared service centers of expertise.

“We are targeting an absolute reduction in European operating expenses from these and other programs of £0.3 billion in the 2014 financial year,” Colao added.

Future outlook

Vodafone faces stiff headwinds from regulation, competition and a tough economic environment, particularly in Europe.

“However, we are well positioned, with broad geographic exposure which includes attractive growth markets in India, Africa and the US, and a differentiated enterprise franchise. We benefit from a strong balance sheet and will continue our major focus on shareholder remuneration, while consistently reinvesting in our network to enhance the customer experience,” Colao said.

Vodafone expects adjusted operating profit for the 2014 financial year to be in the range of £12.0 billion to £12.8 billion.

The mobile operator expects free cash flow to be around £7.0 billion, including the £2.1 billion VZW dividend due in June 2013.

Pix source: Bloomberg

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