Transcript for ‘Delivered on guidance’

Speaker key

IV - Interviewer
AH - Andy Halford


IV - What are the financial highlights for the year?

AH - There are three highlights that really stand out, for me. The first one is we delivered on our guidance for the year, both profit and cash flow. Secondly, we returned about £10bn to our shareholders during the period. And thirdly, we’ve ended the year with our debt levels at a very low level, compared with recent history. Overall, revenues grew about 1.5% on a like-for-like basis. The EBITDA was fairly constant year-on-year, and the adjusted operating profit, allowing for some of the acquisitions and disposals we made, was actually up very slightly, year-on-year, particularly driven by Verizon Wireless. Cash flows at £6bn was very much as we had expected.

IV - The European economic situation affected the results this year. How do you see it affecting next year’s?

AH - Europe has clearly been much more difficult economically, and I think, if I step back, what we have seen is northern Europe performing pretty well, Turkey performing extremely strongly, and southern Europe being where some of the challenges have been. So, just very quickly, the UK and Germany have performed very well. Revenues were up. Their enterprise revenues were up. The data revenues grew. In Germany, we’re busy rolling out the LTE networks. In Turkey, we saw the revenues there grow 25%; good market share gains. But, offsetting against that, not surprisingly, Italy and Spain were definitely tougher during the year. I think as we look forwards, we would expect the next year to have the same sort of shape to it, so we’ll continue to really drive the northern European markets, and we will ride out the economic situation in southern Europe.

IV - How has the AMAP region performed against your expectations?

AH - AMAP we’ve been really pleased with. About an 8% growth in the top-line. 8% growth in the profits, on a like-for-like basis, driven very much by India, which grew very nearly 20% during the year. Vodacom also performed very strongly, about 7% growth down in South Africa and the surrounding countries. The other side of it, Australia, a bit more difficult but, nonetheless, we’re working through some of the issues that we have there. And then, also worthy of note, Egypt, where we have done extremely well post-the revolution, and also in Ghana, where we’re now taking strong market share.

IV - Verizon Wireless continues to deliver very strong results, over 42% of the adjusted operating profit. Can you give us some of their key highlights for this year?

AH - Verizon Wireless has yet another strong year. Revenue growth, about 7%, which is similar to what it’s been achieving right the way through the recession. It’s the number one player in the US market. It has been rolling out the LTE technology very fast, in fact, ahead of a lot of Europe, so about 2/3 of the population is now covered by that network. The bottom-line contribution to Vodafone has been extremely strong. Of course, during the course of the year it paid the US$10bn dividend, which for us, our share £3bn, of which we returned £2bn to our shareholders at the start of the year. So, really pleased with the way that the US business has performed.

IV - What are you doing to reassure shareholders your company’s investment case is still strong?

AH - We have been very focussed upon returns to our shareholders, to make sure we can maximise those but, at the same, invest enough in our networks. The first thing we did was committed that we would increase our dividends by at least 7% a year, for three years. Secondly, the Verizon Wireless dividend that we received, we have remitted £2bn of that straight on to our shareholders within days of receipt. And thirdly, with some of the asset disposals we’ve done over the last couple of years, we have committed to significant amounts of share buybacks. If you put it all together, over the last four years we’ve returned £26bn, which is roughly 30% of our market cap, has actually gone back to our shareholders. So, big focus on shareholder returns.