Vodafone’s sometimes contentious stake in domestic operator Verizon Wireless continues to pay off for the international telecom giant, which despite struggles in some of its older markets managed to post improved financial results for its 2012 fiscal year ending in March.
The company, which owns 45% of Verizon Wireless, reported a 1.2% year-over-year increase in total revenues, growing to $59.2 billion in 2012. Vodafone’s European operations posted a .6% drop in revenues, while operations in Africa, the Middle East and Asia Pacific posted a 3.7% gain.
Vodafone noted that it ended its fiscal year with 446.5 million customers, including its proportionate stake in Verizon Wireless.
Vodafone’s management blamed the European shortfall on “tough macroeconomic and regulatory environment in much of Europe has made revenue growth in that region increasingly challenging.” More specifically, Vodafone noted that gains in its Northern European operations across Germany, the United Kingdom and the Netherlands were offset by a slowdown in operations across Italy and Spain.
Revenues from the company’s share of Verizon Wireless increased 9.3% year-over-year to $6.3 billion. Vodafone also received a $3.8 billion dividend payment from Verizon Wireless during the year, with $2.6 billion of that being passed on to Vodafone shareholders. Vodafone’s management added that Verizon Wireless accounted for 42.2% of the company’s adjusted operating profit for 2012.
Verizon Communications, which controls 55% of Verizon Wireless, has said numerous times that it would be interested in acquiring Vodafone’s stake in the country’s largest wireless operator, an offer refused by Vodafone, which seemingly is becoming more reliant on the financial strength of the operator.
Vodafone also singled out its operations in South Africa, India and Turkey as significant drivers of increased growth, with expectations that these markets will show continued potential.
“We expect these and our other emerging markets to represent an increasing proportion of our revenue, profit and cash flow in the coming years,” the company explained.
However, recent divestitures and the tax ramifications of those sales impacted costs for the year, with profits falling 11% to $8.9 billion.
“While operations in Northern Europe, Emerging Markets and the stake in Verizon Wireless all did well, operations in Southern Europe struggled,” noted Ovum senior analyst Emeka Obiodu, in a statement. “This is no surprise. Indeed, at a time of worsening economic conditions, especially in Greece, Italy, Spain and Portugal, it would have been too much of a miracle for Vodafone’s numbers in those regions to come out well. Spain and Italy were particularly hit hard.”
A positive for Vodafone continues to be increased consumption of non-voice services, with the company reporting a 22.2% year-over-year increase in revenues for that segment that now makes up 14.5% of its total revenues. Analyst also noted that the carrier has made significant progress in getting consumers to sign up for rate plans that include voice, messaging and data services.
“Not doing so, while persisting with per unit pricing for voice and SMS, opens the way for [over-the-top] services such as WhatsApp and Skype to gain inroads in the market,” Obiodu added.
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