Vodafone IMS

Vodafone the second largest ( behind China Mobile) mobile telecoms company in the world. I have a holding in my income portfolio (epic code: VOD).

VOD issued their 1st quarter IMS today, announcing a decline in Group service revenue of 3.5%.  Europe is now declining in all markets, with the previously strong German market showing service revenue declining by 5.1% and the declines in Italy and Spain showing no deceleration.

On a positive note emerging markets continue to show good growth, with Turkey and India particularly strong at 15.5% and 13.8% respectively, also the associate investment in Verizon Wireless (VW) performed well as they saw service revenue growth of 7.2%.

Free cash flow (FCF) in the quarter was £1bn, a similar level to last year and the dividends received from VW added £2.1bn to this (this was a $3.2bn share of a $7bn dividend).

They state that VW's net debt stood at $9.8bn at 30 June, this is a $3.6bn increase from 31 March, but was after the payment of $7bn of dividends.  Which would imply that they generated $3.4bn of FCF in the quarter assuming no acquisitions or disposals.  At an annualised FCF generation of around say $12bn+, this reinforces VW's ability, if not inclination, to be able to pay a growing dividend to its two parents.  

They stated in their outlook that trading in the first quarter was consistent with their expectation for the 2014 financial year and therefore confirmed their outlook for the 2014 financial year.

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