Global telecom operator Vodafone announced its investment and cost optimization program for fiscal 2018.
Improvement in customer experience, particularly in the markets where it does not dominate, will be one of the focus areas for Vodafone.
Vodafone aims to maintain momentum in NGN broadband and grab profitable revenue share in total communications. Vodafone will also be monetizing mobile network leadership via more-for-more initiatives.
“Within our unchanged ‘mid-teens’ envelope for capital expenditure (Capex) as a percentage of revenues, we will begin to expand and evolve our 4G network to 4G+, while deploying fibre backhaul in urban areas as part of our preparation for 5G,” said Vodafone Group, announcing the Q4 fiscal 2017 earnings report.
Vodafone aims to invest in enhancing its digital capabilities – primarily focusing on data analytics to provide personalized, segmented offers to customers. Vodafone will also enhance Capex (capital expenditure) related investment in IT to modernize billing and support systems.
Fit for Growth
Vodafone aims to reduce organic operating costs as part of the second phase of its Fit for Growth program for the second year in succession.
“We want to grow our adjusted EBITDA faster than our service revenues, expanding our margins and increasing our cash flows. Excluding Vodafone India we expect to grow our adjusted EBITDA on an organic basis by 4 percent-8 percent, implying a range of €14.0-€14.5 billion,” said Vodafone Group in a statement.
Fit for Growth strategy adopted by Vodafone has resulted into improved margin performance across both Europe and AMAP, with 15 markets out of 22 growing adjusted EBITDA faster than service revenue, driving a 1.2 percentage point improvement in organic Group adjusted EBITDA margin (Europe: +1.0 percentage point, AMAP +1.6 percentage points).
The adjusted EBITDA margin in India declined by 2.2 percentage points as revenues contracted and network costs increased as it deployed 4G services.
Vodafone, as part of its strategy to improve cost savings, conducted a benchmarking analysis of its cost structure by country and for each operational process.
Vodafone has developed a new customer profitability analytics solution to provide highly granular insights into the profitability of individual customers, supporting actions on margin assurance, price plan design, geographical channel deployment, enterprise bid management, segmented propositions and network roll out.
Vodafone will be rolling customer profitability analytics solution across the Group over the coming year. Vodafone has also set new internal three-year margin targets as part of Phase 2 of the Fit for Growth program.
Vodafone in fiscal 2017
Vodafone’s data traffic in Q4 grew 62 percent (Europe +55 percent, AMAP +75 percent). Vodafone has 75 million 4G customers after adding 15.7 million customers in H2. 4G users have driven average usage per smartphone customer in Europe up 50 percent to 1.7 GB per month, with 65 percent of the data traffic in Europe on 4G network.
In South Africa, data demands fuelled ARPU, which increased 18 percent when moving from 2G to 3G, and by 26 percent when moving from 3G to 4G. 4G adoption has driven average usage per customer up to 1.3GB per month, and the number of active data users increased 8.3 percent to 19.5 million.
Vodafone India added 10 million 3G / 4G customers during the year and launched 4G in all 18 circles where it has 4G spectrum.
The telecom operator said Enterprise business contributes 29.6 percent revenue to total service revenue. Enterprise service revenue growth was 2.3 percent (2.8 percent in Q3, 2 percent in Q4) — driven by 1.5 percent growth in mobile and 4.4 percent growth in fixed.
Vodafone Global Enterprise (VGE) achieved service revenue growth of 3 percent — slower than the prior year mainly due to contract losses in the UK, balancing of growth and profitability objectives.
During the year, Vodafone increased IoT connections by 42 percent to 54 million.