Vodafone 2011 Annual Report Download - page 40

38 Vodafone Group Plc Annual Report 2011
Other Africa, Middle East and Asia Pacific
Service revenue grew by 7.2%(*) with growth across all markets except Egypt.
In Qatar the customer base reached 757,000 by the end of the year, with
45% of the population now actively using Vodafone services. The decline in
Egypt service revenue was driven by a combination of termination rate
reductions, competitive pressure on pricing and socio-political unrest
during the fourth quarter, offset in part by strong customer and data revenue
growth during the year. In Ghana service revenue growth of 21.0%(*) was
supported by competitive tariffs and improved brand awareness.
VHA integration remains on track and a number of important initiatives were
completed during the financial year to begin realising the benefits of the
merger. Contact centre operations were consolidated into two major
centres in Hobart and Mumbai India, substantial progress was made in the
consolidation of the retail footprint, and a major refit of retail stores is
underway. VHA appointed new suppliers for network managed services,
core, transmission and IT managed services.
EBITDA increased by 5.1%(*) driven by growth in Ghana, New Zealand and
Qatar partially offset by a decline in Egypt resulting primarily from the lower
effective price per minute but also impacted by the socio-political unrest
during the fourth quarter.
Non-Controlled Interests and Common Functions
Verizon Wireless(1)
2011 2010 % change
£m £m £ Organic(3)
Revenue 18,711 17,222 8.6 6.0
Service revenue 17,238 15,898 8.4 5.8
EBITDA 7,313 6,689 9.3 6.7
Interest (261) (298) (12.4)
Tax(2) (235) (205) 14.6
Share of result in
Verizon Wireless 4,569 4,112 11.1 8.5
Notes:
(1) All amounts represent the Group’s share unless otherwise stated.
(2) The Group’s share of the tax attributable to Verizon Wireless relates only to the corporate entities
held by the Verizon Wireless partnership and certain state taxes which are levied on the
partnership. The tax attributable to the Group’s share of the partnership’s pre-tax profit is
included within the Group tax charge.
(3) Organic growth rates include the impact of a non-cash revenue adjustment which was recorded
by Verizon Wireless to defer previously recognised data revenue that will be earned and
recognised in future periods. Excluding this the equivalent organic growth rates for service
revenue, revenue, EBITDA and the Group’s share of result in Verizon Wireless would have been
6.4%(*), 6.6%(*), 8.2%(*) and 10.8%(*) respectively.
In the United States Verizon Wireless reported 2.6 million net mobile
customer additions bringing its closing mobile customer base to 88.4
million, a 3.1% increase. Customer growth improved in the fourth quarter of
the year following the launch of the iPhone 4 on the Verizon Wireless
network in February 2011.
Service revenue growth of 5.8%(*) was driven by the expanding customer
base and robust data revenue primarily derived from growth in the
penetration of smartphones.
The EBITDA margin remained strong despite the competitive challenges
and economic environment. Efficiencies in operating expenses and lower
customer acquisition costs resulting from lower volumes have been partly
offset by a higher level of customer retention costs reflecting the increased
demand for smartphones.
As part of the regulatory approval for the Alltel acquisition, Verizon Wireless
was required to divest overlapping properties in 105 markets. On 26 April
2010 Verizon Wireless completed the sale of network and licence assets in
26 markets, encompassing 0.9 million customers, to Atlantic Tele-Network
for US$0.2 billion. On 22 June 2010 Verizon Wireless completed the sale of
network assets and mobile licences in the remaining 79 markets to AT&T
Mobility for US$2.4 billion. As a result the Verizon Wireless customer base
reduced by approximately 2.1 million net customers on a 100% basis,
partially offset by certain adjustments in relation to the Alltel acquisition.
On 23 August 2010 Verizon Wireless acquired a spectrum licence, network
assets and related customers in southwest Mississippi and in Louisiana,
formerly owned by Centennial Communications Corporation, from AT&T Inc.
for cash consideration of US$0.2 billion. This acquisition was made to
enhance Verizon Wireless’ network coverage in these two locations.
Verizon Wireless’ net debt at 31 March 2011 totalled US$9.6 billion (31 March
2010: US$22.4 billion).
Operating results continued