Vodafone's growth fuelled by data demand and investments

More customers and booming demand for data drove organic service revenues up 7 per cent in Africa, the Middle East and Asia-Pacific. That offset a decline of 1 per cent in Europe due to fierce price competition. Vodafone's statutory losses (see table) reflect a £450m goodwill impairment tied to increased competition in Romania, higher financing costs and nearly £3.4bn in tax expenses, compared with £4.8bn tax credits last financial year.

Vodafone completed Project Spring, its £19bn investment programme. It now offers high-speed 4G coverage to 87 per cent of its European footprint, which helped it to more than double its 4G customer base to 46.8m across 21 countries. However, only 27 per cent of its European customers use 4G, leaving ample headroom for further gains.

Strong broadband demand drove fixed-line revenues up 4 per cent in Europe, but mobile revenues fell 2 per cent there, partly due to higher churn in the UK business as it migrated to a new billing system. Elsewhere, management's focus on selling cloud services and internet-enabled communication products drove total enterprise revenues up 2 per cent. And M-Pesa, Vodafone's money transfer service, grew its active customer base by 27 per cent to 25m as it launched in Albania and Ghana.

Management expects underlying cash profits to rise by between 3 per cent and 6 per cent this financial year. It also predicts that free cash flow will quadruple to €4bn, and anticipates annual dividend growth going forward. Broker Jefferies forecasts adjusted pre-tax profits of £2.54bn, giving EPS of 6.19p (from £1.74bn and 5.04p in FY2016).