Latest Vodafone global result shines light on NZ

Vodafone NZ market numbers, IPO latest, and a Kiwi brought in to rule on a tax dispute.
Vodafone chief executive Russell Stanners said he's not involved in an IPO.

Vodafone's global result, filed in the UK overnight, includes numbers and commentary that indicates its fully-owned New Zealand subsidiary had a mixed final quarter.

"In New Zealand, service revenue declined 0.5% [after allowances for currency movement], with growth in mobile offset by pressure in fixed," management commentary says.

And despite recent comments to NBR by Vodafone NZ chief executive Russell Stanners indicating a public listing has moved very much off his desk, it's still officially in play.

"We continue to explore a potential IPO of Vodafone NZ," the management commentary says.

Worldwide, Vodafone Group had a good year (ending March 31), with operating profit up 15.4% to €4.3 billion ($7.41b). However, the commentary acknowledged this was "primarily due to the deconsolidation [sale] of Vodafone Netherlands [to T Mobile] and FX movements."

In New Zealand, that 0.5% dip in full-year service revenue — that is, total revenue minus handset revenue, most of which goes to phone makers like Apple and Samsung – saw €1.099b ($1.86b) come in the door (service vs handset revenue was not broken out for Vodafone NZ's 2017 result filed with the Companies Office last year, making an immediate comparison problematic. It will likely be several months until Vodafone NZ files details of its full 2018 result).

For the March quarter, Vodafone NZ service revenue was down 2.1% (after allowances for currency movements) to €264 million ($454.94m).

Vodafone NZ made a slim net profit of $57m last year. The local bottom line for 2018 won't be seen until its Companies Office filing. It was not broken out in the group result.

Vodafone, Spark neck and neck in mobile
The group results do say Vodafone NZ finished its March quarter with 2.560m mobile customer connections, a healthy 75,000 bump on the previous quarter's 2.485m and the year-ago quarter's 2.480m.

At Spark's full-year result, the telco said it mobile connections had risen 3.6% to 2.437m. After years of being far beyond Vodafone, thanks to initially backing the wrong mobile network technology, its XT meltdown when it switched tack and initially lacking the iPhone, Spark has consolidated its position as more or less Vodafone's equal in mobile over the past 24 months.

And with its recent quarterly result, 2degrees said it had 1.421m mobile customer connections, down from the year-ago 1.439 million.

More on contract
The number of Vodafone NZ mobile customers on contract plans (much more lucrative than pre-pay) was 42.1% at the end of the March quarter vs the year-ago 40.3%.

That's behind Spark, which has 47.11% on contract but still well ahead of 2degrees (28.7%).

Landline broadband static
In the fixed-line market, Vodafone NZ had 426,000 customers, meaning it has been virtually static over the past couple of years (it had 424,000 in the previous quarter and 423,000 in the year-ago quarter and 412,000 two years ago).

It remains far behind the first-placed Spark (around 670,000) and far ahead of third-placed Vocus (which has around 200,000 between its Orcon, Slingshot and Flip brands).

So far, the launch of Vodafone TV has failed to move the needle (the service, launched in November last year, has Sky TV content at its heart but also supports Netflix, TVNZ and MediaWorks apps and sports frills like cloud storage).

On May 3, Vodafone moved to more aggressively promote the new service. It now bundles the basic version of Vodafone TV free with various Ultimate Home plans (premium Sky channels and Netflix cost extra). Ironically, it's the kind of pushing-the-envelope deal that may have encountered regulatory flak had the Sky TV-Vodafone merger gone through.

Change at the top
It was also announced today that Vodafone's long-time global boss, Vittorio Colao, will step down in July. He will be succeeded as group chief executive by the company's chief financial officer, Nick Read.

Former Spark No 2 Jason Paris recently joined Vodafone Group's inner circle in London as director of convergence. New Zealand eyes are keenly watching for Mr Paris' next move within the Vodafone hierarchy.

Mr Colao, who has been chief executive since 2008, leaves after completing a major merger deal between Vodafone India (No 2 in that market) and Idea Cellular (the Indian No 3).

However, Vodafone faces a major tax claim by the Indian government. Both sides have agreed to arbitration, which will be presided over by a Kiwi: Campbell Mclachlan, QC, a professor in international law with Victoria University (and who was sighted, a little while back in NBR in "New Zealand seen as global 'fix-it' hub.")

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