Interim results for the six month period ended 30 September 2003
Revenues for the 6m period increased by 17.5% to 726.1million euros compared to 618.2 million euros in the previous comparative period. The rise was primarily due to increases in the customer base and usage, which offset the tariff reductions in both outgoing and incoming calls.
Gross blended ARPU(2) for the period under review was 30.98 euros, broadly stable versus the previous comparative period, despite the significant tariff reductions and the further penetration in the prepaid segment. Postpay customers ARPU increased to ?63.53 for the six months under review. Blended AMOU(3) for the period reached 108 minutes compared to 97 minutes in the previous comparative period, representing a 11.3% increase. Moreover, postpay usage increased 22.3% compared to the previous comparative period reaching the record level of 274 minutes.
During the last three consecutive quarters, ARPU and AMOU have shown a constant growth reflecting the increased usage of the customer base after the last tariff reductions and the launch of innovative products and services such as Vodafone live!.
Service revenues increased by 15.9% representing 90.3% of total revenue. Outgoing airtime revenue increased by 24.0% despite the tariff reductions, mainly driven by high usage patterns. Roaming revenues increased by 21.3% due to the increased number of Vodafone roamers, the effect of our full roaming capabilities for prepaid customers and the national roaming of Q-Telecom customers.
Data revenues (including SMS and WAP) increased by 22.2% during the period representing 12.9% of service revenues benefiting from the new Vodafone live! and business services propositions. Going forward these propositions are expected to further boost data revenues.
Data ARPU stood at 3.81 euros, representing 12.3% of total ARPU.
Vodafone live!
Of particular interest is the continued commercial success of Vodafone live!. In the 9 months since its launch in the Greek market, Vodafone live! has attracted 107,000 users, penetrating Vodafone-Panafon's total customer base by 3%. Moreover, Vodafone live! customers contribute with higher data ARPU than the average base.
Monthly Access Revenues reached ?86.3 million from 61.2 million euros in the previous comparative period representing a 41.1% increase, highlighting the success of our bundle minute tariff plans.
Cost of sales increased to 366.4 million euros while gross profit margin reduced to 49.5% from 53.3%. Margins are influenced by high handset sales due to increased additions of postpay customers.
EBITDA increased by 13.3% to 277.4 million euros from 245.0 million euros in the previous comparative period, while EBITDA margin was 38.2% or 1.4 percentage points lower than the previous comparative six-month period. Excluding the dilution effect from merchandise sales, EBITDA margin for the period under review remained fairly steady versus the previous comparative period at 42%.
Comparing EBITDA and Gross profit margins on a consecutive half year basis, they have been slowly increasing showing upward trends for the future. Selling, General & Administrative expenses excluding depreciation and amortisation totaled ?146.8 representing 20.2% of total revenues compared to 22.1% during last year. This reflects the positive results of synergies and increased productivity.
Depreciation and amortisation increased to 94.4 million euros, 21.3% higher than the previous comparative period, reflecting accumulated capital expenditure. Earnings from associate companies reached 4.8 million euros reversing last year's losses of 2.9 million euros. This is mainly due to the significant improvement in the performanceof Vodafone Albania.
Income before taxes reached 182.7 million euros, 22.4% higher than the first half of last year, reflecting the exceptional write down of investments last year, the improvement in the earnings from associates and the significant reduction in net interest expenses. Net income increased by 25.7% to 111.8 million euros compared to 88.9 million euros in the first half of last year.
Subscriber acquisition cost and retention costs represented 9.3% of total revenues compared to 8.0% for the year ended 31 March 2003 reflecting the strong postpay customers net additions, and the investment in retaining existing high value customers.
Net Cash available(4) was positive at 128.4 million euros, financing the company's increased investment needs in light of 3G technology. Debt to equity ratio(5) at the end of September 2003 was 0.18x.
Capital expenditures in network and other fixed assets for the period under review amounted to ?87.0 million, 11% of which was dedicated to 3G expenditure. Total registered customer base as at 30 September 2003 was 3,782,737 customers, an increase of 21.5% since 30 September 2002, while total prepaid customers reached 2,685,330 representing 71% of the total customer base. Total net additions for the six months reached 399,972 representing a 171.2% increase compared to the previous comparative period. Postpay additions remained strong for the period raising the total postpay base net additions to 118,656 or 120.8% higher than the previous first half of last ye ar.
Blended churn for the first half reduced to 11.7% principally due to a reduction in postpay churn. Prepaid churn remained steady.
Regarding customer activity, Vodafone-Panafon's active(6) customer base at the end of September 2003 was 78%. Postpay activity was maintained at the high levels of 95%, while prepaid activity was 71%.
For the period under review Vodafone (Albania)(7) , for the six months ended September 2003 added 82,416 customers increasing its total customer base at the end of September 2003 to 473,473 with the majority of it being prepaid. Vodafone (Albania) at the end of September has captured 44.6% market share. ARPU for the period reached ?18.19 while average minutes of use (AMOU) reached 68.7 minutes.
Revenue for the six months ended 30 September 2003 was 47.86 million euros, EBITDA reached 19.03 million euros, and Earnings before taxes reached 8.18 million euros.
Vodafone-Panafon's CEO, Mr George Koronias, commenting on the results said the following:
'Vodafone - Panafon has again delivered increased growth in profitability in all areas, in an intensely competitive market driven by innovative services such as Vodafone live! that come in conjunction with continuously increasing usage patterns in the customer base, we are certain that we will maintain and further reinforce our leading position, to the benefit of our customers, shareholders, employees and the society as a whole.'
Further announcements:
As at 1 October 2003, Vodafone - Panafon has changed its disconnection policy for prepaid customers from (12 + 6) to (12 + 1) months, in line with most of the European operators. Effectively, 240,000 inactive prepaid customers will be disconnected. This will have no effect on the company financials, as these users have all been inactive for a long period.
Regarding quarterly customer number announcements, going forward, Vodafone - Panafon will announce customer numbers semiannually at the time of its interim and year-end results. Regarding forward statements contained in this press release, they are all made on the basis of certain assumptions which Vodafone-Panafon believes to be reasonable in light of Vodafone-Panafon's operating experience in recent years, and should be treated with caution. By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that c ould cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. No assurance can be given that the forward-looking statements in this presentation will be realized. Vodafone-Panafon does not intend to update these forward-looking statements. '
(1) Unaudited consolidated financial statements according to IFRS, previously noted as IAS. Vodafone - Panafon fiscal year ends 31st March
(2) ARPU= monthly average revenue per user
(3) AMOU= average minutes of use
(4) Net cash available = operating cash flow minus cash for capex payments
(5) Debt / equity ratio = Net debt position / shareholders equity
(6) Inactive customers are those who did not generate incoming & outgoing revenue in the last 3 months.
(7) Vodafone - Panafon holds 49% of the share capital of Vodafone Albania (indirectly through its 100% subsidiary Vodafone - Panafon International Holdings), while Vodafone International Holdings BV has 51%. EUR/LEK exchange rate = 142.792 (average for the 6 months)