Vodafone Group plc. (VOD) reported strong preliminary results for the third quarter of fiscal 2011. Total group revenue was 11.89 billion GBP (approximately $19.25 billion), up 3.5% year over year. The company is the largest wireless service provider of the world by revenue and second largest by total number of subscribers.
Group Service revenue was 10.96 billion GBP (approximately $17.78 billion), up 2.5% year over year. Significant growth in Service revenue was primarily attributable to an increase of 32% in Turkey, a rise of 17% in India, and a growth of 7% in the U.K.
Overall, Africa, Middle East, and Asia-Pacific region revenue was up by 9.3% and that of the European region revenue was up by 0.2%. Verizon Wireless (VZ), a joint venture between Vodafone and Verizon Communications in the U.S., reported 7% increase in services revenue.
Quarterly Data revenue surged by 27% year over year. This was mainly driven by significant demand for high-end smartphones throughout the world and higher mobile connectivity sales. However, voice revenue dropped 2.7% year over year.
Vodafone announced that its full-year 2011 operating profit will be toward the upper-end of its previously announced guidance range of 11.8 billion GBP (approximately $19.1 billion) to 12.2 billion GBP (approximately $19.8 billion).
The rest of the outlook remains the same. Additionally, the company continues to expect its full-year 2011 EBITDA margin to decline at a “substantially” lower rate than the prior year.
Vodafone’s new strategy is to realize further value from non-controlled assets and take full advantage of the most valuable telecommunications growth opportunities ahead, which will deliver sustainable revenue growth, stabilizing margins and strong free cash flows over the next three years. We maintain our long-term Neutral recommendation on Vodafone. Currently, it holds a short-term Zacks #3 Rank (Hold) on the stock.
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