Vodafone rings up 28% rise

Vodafone, the largest mobile phone operator, raised pre-tax profits 28 per cent to pounds 475m last year, but its results showed the effects of a price war and a switch in the market to low-usage customers.

UK turnover increased to pounds 1.24bn from pounds 1.08bn the year before, a much slower rate of growth than the 630,000 net gain in subscribers, to just over 2.45 million. Chris Gent, managing director, said the falling trend in average revenue per subscriber was a result of the greater proportion of lower-spending individuals connected compared with business users.

But he said there were signs that this trend might be reversed by newly introduced "bundled" tariff packages, where customers are offered some free usage with subscriptions. This had shown a "very encouraging start".

Vodafone said churn rates, the rate at which subscribers cancel, had edged down to 25.6 per cent by the end of March from 28.5 per cent a year earlier as a result of stringent controls.

Vodafone had not been expected to be hit as much as its biggest rival, Cellnet, by cancellations, following the strong entry of Orange into the digital mobile phone market.

He said new tariffs could slow the anticipated decrease in revenue per subscriber during the new few years as more personal customers mix with Vodafone's business-based subscribers. Revenue per customer for the year to March was pounds 484.

Vodafone said strong demand for mobile telecommunications continued world- wide. Subscribers abroad more than doubled last year to 585,000, 20 per cent of total users.

The company may spend up to pounds 700m in infrastructure development and exploring international opportunities in the year to end-March 1997, Ken Hydon, finance director, said. Net debt could exceed pounds 600m by March next year, with borrowings likely to be used to fund further strategic investments. But he added that "naturally, if a large investment opportunity arose we could issue shares".