For the third quarter, organic service revenue declined 0.4%. Analysts were expecting a 0.7% decline in organic service revenue.
Overall, total group revenue for period fell by 13.5% but this number was overshadowed by the better-than-expected organic service revenuefigure. On a country-by-country basis, Vodafones revenue returned to growth within the UK, while it has also seen a steady recovery in the rest of Europe. Revenue from growth markets India and Turkey expanded at a mid-double-digit rate.
Whats more, along with an improve performance across all of its markets, Vodafone also reported today that the groups Project Spring mobile build was 50% complete.
Vodafones 19bn Project Spring infrastructureproject is designed to make Vodafone one of the best mobile service providers within Europe.
Around half of the cash earmarked for Project Spring will go towards speeding up 4G deployment. Vodafone will also add additional infrastructure to boost its wireless network capacity. In todaysinterim management statementVodafone noted that the groups European 4G covered has now increased to 65%.
And the company has chosen the perfect time to embark on this huge transformation of its network.
LTE, or Long-Term Evolution is a standard for wireless communication of high-speed data and only serves to improve 4G connectivity and speed for mobile devices. At present, the LTE presence within Europe is severely underdeveloped. In particular, only around 6% ofEuropean subscriptions are paying for 4G services. Over in the US,Verizon Wireless has a 60% penetration rate in LTE services.
So, its pretty easy to see that LTE has huge growth potential within Europe.
As Vodafone improves its network across Europe, customers are going to come to see the company as the gold standard in 4G LTE connectivity. With one of the best mobile networks around, Vodafones management expect that the company will be able to add1.5% of penetration in the 4G LTE market per quarter over the next few years.
Some analysts have stated that this is a conservative estimate but whatever the rate of growth turns out to be, anything above 1% per quarter is extremely impressive.
Additionally, the margins on 4G LTE data contracts are usually higher than the traditional text and voice messaging services. So, not only will Vodafone benefit from the companys high-speed network coverage across Europe, which will undoubtedly attract customers, but the company will benefit from higher profit margins on the data contracts its selling to customers.
Then there are Vodafones strategic acquisitions to consider. The purchase of Ono and Kabel Deutschland should allow the group to cross-sell its products. When fully integrated, Vodafone will be able to offer customers across Europe broadband, cable television, and mobile connectivity in one bundle.
Vodafones earnings are set to return to growth next year growth of 2% and 23% is pencilled in for the years ending March 2016 and 2017 respectively which should support the companys hefty dividend payout.
Indeed, at present the company is offering a yield of around 5%, a market beating payout thats difficult to find elsewhere.
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