Vodafone Group Plc, the mobile phone operator that separated from Racal Electronics Plc last September, has reported pre-tax profits for the year to March 31 up 11% at UKP272m on revenues that rose 9% to UKP585m. Chief executive Gerry Whent, reading his statement to the press at a London hotel yesterday, said Vodafone Ltd, representing 80% of group turnover, maintained an overall market share of 56% of the UK cellular market. The rate of gross connections, he said, is increasing on a month by month basis, as is the revenue per subscriber. Net connections was up on the previous year, though the churn rate – the rate at which customers have left the network – remained high (up to 24% of its peak); Whent puts this down to shrinking businesses and job cuts – the Yuppie image the phones presented is dead out of fashion. The firm boasted a subscriber base of 715,000 at the year end; Vodafone projects the addition of a further 70,000 to 90,000 in the current year, net after churn. Revenue stream per head fell to UKP700 during the year, now having stabilised at around UKP711. Other businesses within the group are reported to have made good progress over the year, Vodac, Vodapage, Vodata and Telecell all having improved profitability.
Orbitel
Orbitel Mobile Communications, Vodafone’s 50-50 joint venture with Ericsson was adversely affected by late deliveries of test equipment to Groupe Speciale Mobile approval houses, the collapse of the UK Telepoint market and certain product rationalisation. Last December, Vodafone opened the UK’s first digital mobile telephone service which forms part of the pan-European system being implemented throughout the continent. This new digital network is to provide the foundation for a Micro Cellular Network – a low-cost consumer-oriented urban cellular service – to be launched on schedule in 1993. Whent cites Vodafone’s potential competitors as being Personal Communications Network operators Mercury and Hutchison – they will likely come out with something serious in 1994, he predicted… we wish them well. Vodafone ploughed between UKP30m and UKP40m into the GSM network last year, and is expected to invest a further UKP60m to UKP70m this year, and next year. For the first two of years, it is expected that the Vodafone GSM network will operate at a loss, lucky if it pulls in 10,000 subscribers in the first year. In March, Band Three Radio Ltd became a wholly-owned subsidiary of the Vodafone group, to be merged with its competitor GEC National One, thus creating a viable entity. Vodafone now has a 50% interest in the new joint venture, now called National Band Three Ltd. Last November, Vodafone took a 30% stake in Pacific Link Communications Ltd, a Hong Kong cellular telephone network operator, for a cash consideration of $75m. The company is reported to be trading profitably and to have added to the group’s earnings per share. In January, Vodafone increased its investment in Scandinavia by a further UKP21m, now holding 19% of NordicTel Holdings AB (CI N0 1,854). These funds are to be used by the joint venture to help finance the building of GSM networks in Sweden and Denmark. After the various investments and capital outlay, Vodafone reports UKP65m cash at the year end, up UKP34m from the end of the previous year. Long-term group prospects are perceived to be good.
