Vodafone Group PLC is engaged in providing voice and data communications services for both consumers and business customers, with a significant presence in Europe, the Middle East, Africa and the Asia Pacific region. I have a holding in my income portfolio (epic code: VOD).
Vodafone announced their interim results on Tuesday with total revenue up 8.9% to £20.8bn, but down 3% on an organic basis. Organic service revenue was down 2.8% to £19.1bn.
Profit before tax was £0.4bn, down from £1.5bn last year, as depreciation and amortisation increased by £1.3bn. This will be an ongoing feature as Vodafone plan to spend £19bn on capex over the two years to 31 March 2016. So EBITDA at £5.9bn was 5.5% above last year and management expect it to be in the range of £11.6bn to £11.9bn for the full year, a tightening of the range from £11.4bn to £11.9bn that was the previous guidance.
EPS was 20.37p from continuing operations compared to 58.42p last year and the interim dividend was increased by 2% to 3.6p.
Free cash flow was a negative £1.2bn as capex and working capital were increased by £1bn each. Dividends of £2bn were paid during the period, which in addition to the £1.2bn free cash outflow, £2.9bn cash paid for the shares in Ono and assumption of its £2.9bn of net debt, were the main causes of Vodafone's net debt increasing by £8.6bn to £23.9bn.
Vodafone is placing some big bets on improving its network, which if they pay off and the timing is right, will provide good returns for investors as European markets stabilise.
The shares at 224.8p have moved up almost 22% over the last month, but still yield 5.5%.
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