Vodafone Ireland continues to thrive
14-11-2006
by Ciara O'Brien

The third quarter brought good news for Vodafone Ireland, which added 29,000 subscribers to its fold in the three-month period to 30 September 2006.

This brings Vodafone Ireland's total subscriber base to 2,119,000. The network is attributing this upswing to its continued focus on the introduction of new products and services.

Irish mobile phone users continue to perform above the European average, using 225 voice minutes and 114 text messages each month in the quarter compared with a Vodafone European average of 137 voice minutes and 59 text messages.

In total, voice minutes in the 12 months ending September 2006 increased by 9.8 percent to 5,393 million, but average blended revenue per user (ARPU) for the period dropped 4.9 percent compared with a year earlier as prices and offerings became more competitive.

Vodafone Ireland's customers also took to the network's new offerings; some 68,000 signed up to the Sky Mobile TV service, which was launched in June.

"Today's figures again confirm that Vodafone Ireland remains the leading mobile operator in Ireland, despite the significant challenges we face in this highly competitive market. Our customers are now opting to use their mobile phone as their primary communications tool and are therefore using their phones more than ever for voice calls, texts, internet access and now even Mobile TV," said Gerry Fahy, Strategy Director, Vodafone Ireland.

On a group basis, Vodafone made a half-yearly loss before taxation of STG3.3 billion, but once-of charges of STG8.1 billion had a major impact on the bottom line.

The impairment charge was blamed on higher interest rates, along with pricing and regulatory pressures in the German market. Excluding these impairment charges, the mobile group posted a profit of STG4.8 billion before tax.

In the six months to 30 September 2006, the firm achieved group revenue of STG15.6 billion, with organic growth of 4.1 percent.

Chief executive Arun Sarin said the group had shown progress in "very competitive markets", and was on track to meet full year targets.

However, there was some weakness in the mature European markets, which Vodafone blamed on price erosion and regulation. UK, Germany and Italy all saw falling revenue in their markets.

In a bid to battle this, the company said it is embarking on a strategy of stimulating revenue and slashing costs.

Fixed to mobile substitution is high on the list of revenue drivers, supported by larger minute bundles and new tariffs, migrating customers from prepaid to contract subscriptions, and targeted promotions.

Work has already begun on cost cutting initiatives within the Vodafone group, with global IT outsourcing expected to deliver between 25 percent to 30 percent unit cost savings within three to five years. Progress has also been made on consolidating data centres in Europe, and sharing 2G and 3G networks in Spain.

The weaker European markets were balanced by strong growth in emerging markets, including Egypt, South Africa and Romania.

"These results show that Vodafone is on track to deliver on its key targets for the current financial year. Competitive and regulatory pressures in the European region have been offset by strong performances in our developing markets and the United States," said Sarin. "We have also made good progress since May in the execution of our new strategy and the response to our new products and services has been very encouraging."

Vodafone in advertising partnership with Yahoo

Meanwhile, the mobile network has hooked up with internet firm Yahoo to provide mobile advertising services to its customers in the UK. The deal will see customers save cash on some Vodafone services if they agree to accept targeted display ads, with speculation that it could include the Vodafone Live portal, picture messaging, games and television services. Customers will be able to take advantage of the deal in the first half of 2007.

"Since we announced our intention to develop revenue from mobile advertising as part of our mobile plus strategy unveiled in May, we have carried out extensive customer trials," said Nick Read, chief executive of Vodafone UK.

"We will now use the experience to determine with Yahoo how best to ensure customers, who choose to receive targeted messages, get better value as well as a richer mobile experience. This will also ensure that advertisers are given a compelling proposition."