Preliminary Results Part 1
Vodafone Group PLC
28 May 2002
PART 1
VODAFONE GROUP PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
YEAR ENDED 31 MARCH 2002
* Statutory turnover increased by 52% to £22,845 million
* Data revenues increased by 87% to £2,093 million
* Statutory operating profit (note 1) increased by 35% to
£7,044 million
* Earnings per ordinary share (note 1) increased by 45% to
5.15 pence
* Proportionate EBITDA (note 2) increased by 44% to £10,093
million, with an improvement of 3% in the mobile business
EBITDA margin to 36%
* Operating cash flow per share increased by 60% to 11.92
pence
* Free cash flow of £2,365 million, after investing £4,145
million of tangible capital expenditure
* Dividend increased by 5% to 1.4721 pence per share for the
year
* Continued growth in customer base with a 22% increase in
proportionate registered customers to 101.1 million.
Venture customer base over 229 million
* Strong financial position. Net debt of £12,034 million,
representing 14% of market capitalisation at 31 March
2002. Single A credit ratings maintained
* No impairment in respect of the Group's controlled mobile
businesses. £6,000 million impairment of other Group
assets (note 3)
Note 1 - before goodwill amortisation of £13,470 million and
exceptional items, which comprise exceptional operating costs
of £5,408 million and exceptional non-operating items of £860
million
Note 2 - before exceptional items
Note 3 - see page 17, 'Exceptional items' for further details
SIR CHRISTOPHER GENT, CHIEF EXECUTIVE, COMMENTED:
'The past year has seen the Group successfully execute its
adjusted strategy, delivering very strong operational
performance and exceptional financial results, including the
generation of substantial free cash flow. In the current
year, we envisage net customer growth of just below 10%,
allowing for the expected disconnections of non-revenue
generating handsets, and a modest but real improvement in ARPU
in most of our major European markets. This combination should
lead to double-digit revenue growth. In addition, we will
continue to focus on improving operational performance and
expect to achieve further increases in EBITDA margin, which
should result in still better operating cash flow in the year
ahead. We have every confidence in the continued growth
potential of the business. This year will see many exciting
new developments which will sustain the long-term growth of
Vodafone in the years to come.'
JULIAN HORN-SMITH, GROUP CHIEF OPERATING OFFICER, COMMENTED:
'These results highlight our excellent operational performance
during the year. The business has achieved satisfactory
customer growth with a better mix of customers in most
markets, which has helped contribute to stability in ARPU,
ahead of our previous expectations despite reductions in
incoming call tariff rates. The continued focus on driving
down costs and initiatives led by our Global Products and
Services team in achieving cost efficiencies, best practice
sharing, global benchmarking and standardisation have
contributed to a significant margin improvement and the
generation of exceptional free cash flow. Most of our
networks have moved to the single Vodafone brand, where
sponsorship deals such as Ferrari and the global offering of
seamless services are not only contributing to improved ARPU
but are also helping to extend our brand recognition and
increase customer loyalty.'
GROUP FINANCIAL HIGHLIGHTS
Robust operational trading performance
Statutory Year ended 31 March
2002 2001 Increase
(note 2)
as restated
£m £m %
Turnover 22,845 15,004 52
Total Group operating
profit/(loss)
- before goodwill amortisation
and exceptional items 7,044 5,204 35
- after goodwill amortisation
and exceptional items
(note 1) (11,834) (6,989)
Profit/(loss) on ordinary
activities before taxation
- before goodwill amortisation
and exceptional items 6,199 4,027 54
- after goodwill amortisation
and exceptional items
(note 1) (13,539) (8,086)
Exceptional items include an impairment charge of £6.0 billion
in respect of the carrying value of Arcor and four other
investments. No impairment charge was necessary in respect of
the Group's controlled mobile businesses.
Proportionate (note 3) Proportionate EBITDA
Proportionate (before exceptional
turnover items)
Year ended 31 March Year ended 31 March
2002 2001 Inc 2002 2001 Inc/
(note 4) (note 4) (dec)
Mobile telecommunications £m £m % £m £m %
Northern Europe 6,516 5,357 22 2,264 1,674 35
Central Europe 4,694 4,323 9 2,068 1,478 40
Southern Europe 5,109 3,521 45 2,131 1,450 47
Americas 5,638 5,008 13 1,907 1,627 17
Asia Pacific 5,373 2,771 94 1,321 587 125
Middle East and Africa 488 448 9 211 227 (7)
------ ------ ------- ------
-
27,818 21,428 30 9,902 7,043 41
Other operations
Europe 821 767 7 (8) (32) 75
Asia 1,160 35 199 5
------ ------ ------- ------
29,799 22,230 34 10,093 7,016 44
====== ====== ====== ======
Organic growth at constant exchange rates 9 24
STRONG CASH GENERATION AND CONTINUED GROWTH IN EARNINGS AND
DIVIDENDS
Per share information Year ended 31 March
2002 2001 Increase
(note 2)
as restated %
Basic earnings/(loss) per share
- before goodwill amortisation
and exceptional items 5.15p 3.54p 45
- after goodwill amortisation
and exceptional items (note 1) (23.77)p (16.09)p
Dividend per share 1.4721p 1.4020p 5
Operating cash flow per share 11.92p 7.47p 60
Notes
1. Goodwill amortisation charge of £13,470m, compared with
£11,873m for the year ended 31 March 2001. Exceptional
items comprise exceptional operating costs of £5,408m,
including an impairment charge of £5,100m in respect of
Arcor, Cegetel, Iusacell and Japan Telecom, and exceptional
non-operating items of £860m including an impairment charge
of £900m in respect of the Group's investment in China
Mobile (Hong Kong) Limited. For the year ended 31 March
2001, exceptional operating and non-operating items
totalled £320m and £(80)m, respectively. Further details
are given in Notes 2, 3 and 4 on pages 27 and 28.
2. Certain prior period comparative information has been
restated following the adoption of FRS 19 during the
period. Further details are given in Note 1 on page 26.
3. Proportionate information is calculated on the basis
described in Note 1 on page 26.
4. Proportionate comparative financial information is
presented on a pro forma basis for the acquisition of
Mannesmann as described in Note 1 on page 26.
GROUP OPERATING HIGHLIGHTS
Operational performance
* Stable blended ARPU trends maintained in the Group's major
European markets, despite continuing reductions in incoming
termination rates.
* Non-voice service revenues in the Group's controlled
mobile businesses of 11.1% of total service revenues for
the year ended 31 March 2002, compared with 8.1% for the
prior year. Data expected to reach 20% of service
revenues in 2004 due to a combination of better voice
revenues and the later than expected availability of
terminals and applications.
* Worldwide customer base of 101.1 million proportionate
registered customers at 31 March 2002, representing growth
of 22% since 31 March 2001. Venture customer base over
229 million registered customers.
* Improved quality of customer base through strategic focus
on gaining and retaining high value customers. Active
customers represented 92% of total registered customers in
the Group's controlled mobile businesses, compared to 90%
at 31 March 2001.
* An improvement of 3% in proportionate EBITDA margin to 36%
in the Group's mobile businesses, with significant
increases achieved in the key markets of the UK, Germany
and Japan.
* Tangible capital expenditure of £4,145 million, lower than
expected due to better payment terms and prices and a
combination of revised network planning and increased
efficiencies. The Group expects this number to increase
to approximately £6,000 million in the 2003 financial
year.
* Free cash flow of £2,365 million in the year, with £1,759
million generated in the second half of the financial
year.
Commercial initiatives
Improved service offerings
* Commercial GPRS services available in all the Group's
major markets, with Vodafone the first mobile operator to
offer commercial GPRS roaming across twelve European
countries.
* Launch of new voice roaming services including Eurocall,
Virtual Home Environment, prepaid roaming and assisted
roaming, enabling the Group to gain new customers and
achieve incremental revenue growth.
* Unified messaging now launched in six European countries.
* Success of camera-enabled handsets in Japan propelling J-
Phone Vodafone into the number two operator position in
Japan at 31 March 2002. Initial picture messaging services
now available in Germany and Portugal. Picture messaging
services will be launched in the Group's other European
markets later this year.
Global branding
* Successful migration of the majority of subsidiaries to
the single Vodafone brand.
* Launch of the global Vodafone brand through 'How are you?'
campaign, with enhanced global awareness of the Vodafone
brand through sponsorship of Ferrari from the 2002 Formula
One motor racing season.
* Innovative partner network agreements signed with
Radiolinja and Teledanmark Mobile to promote dual-branded
roaming products to international travellers and corporate
customers in new territories.
Transactions
* Acquisition of additional stakes in Japan Telecom and the
J-Phone Group during the year, including the successful
completion of the Group's tender offer for a further 21.7%
stake in Japan Telecom, taking the Group's interests to a
controlling 66.7% in Japan Telecom and an economic
interest of almost 70% in the J-Phone Group.
* Completion during the period of the acquisition of Eircell
in Ireland, a 34.5% interest in Grupo Iusacell in Mexico,
together with increased stakes in the Group's subsidiaries
in Spain and Australia.
* Disposal of 11.7% equity stake in Shinsegi Telecom, Inc.
in Korea, and Arcor's railway telecommunications business.
BUSINESS REVIEW
The results for the year ended 31 March 2002 represent an
excellent performance in competitive conditions and
demonstrate the continued operational strength of the Group in
a period in which the Group also successfully implemented its
realigned strategy announced in early 2001.
Statutory turnover increased by £7,841m from £15,004m in the
comparable period to £22,845m in the year ended 31 March 2002.
The increase comprised £1,105m from Japan Telecom, £3,323m
from the J-Phone Group (subsequently rebranded J-Phone
Vodafone), £477m from Eircell (subsequently rebranded Vodafone
Ireland) which were all acquired by the Group during the
period, an additional £1,326m from Airtel Movil S.A.
(subsequently rebranded Vodafone) which was acquired by the
Group in the second half of the financial year ended 31 March
2001, and £1,610m from existing businesses, representing
growth of 11% on the prior period. This growth resulted from
the larger customer base in controlled businesses, offset by
the year on year decline in ARPU, and lower connection
revenues due to the lower net customer growth. Service
revenues increased by £6,134m from £12,605m in the year ended
31 March 2001 to £18,739m in the year ended 31 March 2002.
The total statutory Group operating loss, after goodwill
amortisation and exceptional items, increased in the year,
primarily as a result of a £5.1 billion impairment charge
taken in respect of certain of the Company's investments,
further details of which are given on pages 17 and 18, and an
increase in the annual goodwill amortisation charge which
increased from £11,873m to £13,470m.
Mobile proportionate turnover increased by £6,390m to
£27,818m, with the increase largely attributable to J-Phone
Vodafone (£2,500m), Vodafone Ireland (£477m), the increased
stake in Vodafone Spain (£968m), and Grupo Iusacell (£151m).
The remainder of the increase, £2,294m, arose from existing
businesses. Proportionate turnover from other operations
increased by £1,179m, mainly as a consequence of the
additional 59.2% stake acquired in Japan Telecom during the
year.
The Group's overall mobile proportionate EBITDA margin
increased from 33% in the comparable period to 36% for the
year ended 31 March 2002. Proportionate EBITDA margins
increased in all the Group's major markets due to the Group's
strategy of focusing on margin management, including reduced
connection costs, and the retention of high value customers.
The UK EBITDA margin increased from 31% to 34%. In Germany,
proportionate EBITDA margins increased significantly, from 35%
to 45%, due primarily to lower customer acquisition costs from
the significantly lower gross customer growth and the focus on
customer retention initiatives. In Japan, proportionate
EBITDA margins improved from 19% to 23%, attributable to
customer growth, the success of 'sha-mail' increasing data and
SMS revenue, and the initial operational efficiencies achieved
through merging the regional operating companies into a new
single structure.
A review of the Group's principal business, the supply of
mobile telecommunications services and products, is described
below. A review of the Group's other operations, which
primarily comprise fixed line telecommunications businesses
and the Vizzavi Europe joint venture, can be found on pages 13
and 14. The appendices to these results also contain a summary
of certain key performance indicators for each of the Group's
segments, providing details of the registered customer base,
including further analysis between prepaid and contract,
active and inactive customers, ARPU and non-voice service
revenue data.
On 1 April 2001, in response to the expansion of the Group,
the Company implemented a planned reorganisation of its
overall management structure into five main regions: Northern
Europe, Middle East and Africa; Central Europe; Southern
Europe; Americas and Asia; and Pacific. Subsequent to this, on
18 December 2001, Vodafone announced a further change to its
regional structure. With effect from 1 January 2002, the
Group's interests in Japan, China and India were formed into a
new Asia region. All of the Group's other regions remain
unchanged. The geographical segments for the analysis of the
Group's operating results for the year ended 31 March 2002
have been modified and comparatives have been restated.
Comparative results for the Group have also been restated
following the adoption of FRS 19, 'Deferred tax', further
details of which can be found on page 26.
Mobile Telecommunications
The Group's mobile businesses performed strongly in the
period. Proportionate turnover increased by 30% to £27,818m,
with all segments reporting strong growth, and proportionate
EBITDA, before exceptional items, increased by 41% to £9,902m.
In the year ended 31 March 2002, the Group added a further
18.1 million customers to its proportionate registered base,
with 8.0 million arising through net stake changes and 10.1
million through organic growth. At the year end the Group had
101.1 million proportionate customers and the total venture
base was 229.2 million registered customers. This compares
with a proportionate registered base and total venture base of
83.0 million and 188.7 million, respectively, as at 31 March
2001.
Northern Europe
Financial highlights Year ended 31 March
2002 2001 Increase
£m £m %
Statutory turnover - United Kingdom 3,763 3,444 9
- Other Northern
Europe 1,669 1,067 56
------- -------
5,432 4,511
------- -------
Statutory total - United Kingdom 941 795 18
Group
operating - Other Northern
profit (note 1) Europe 744 489 52
------- -------
1,685 1,284
------- -------
Proportionate - United Kingdom 3,763 3,458 9
turnover (note 2) - Other Northern
Europe 2,753 1,899 45
------- -------
6,516 5,357
------- -------
Proportionate - United Kingdom 1,294 1,068 21
EBITDA (note 2)
(before exceptional - Other Northern
items) Europe 970 606 60
------- -------
2,264 1,674
------- -------
Proportionate - United Kingdom 34% 31%
EBITDA margin - Other Northern 35% 32%
(note 2) Europe
(1) - before goodwill amortisation and exceptional items
(2) - comparatives are presented on a pro forma basis for the
acquisition of Mannesmann
United Kingdom
Vodafone UK continued to perform well in the year, as benefits
from both the realignment of commercial policies to promote
the acquisition and retention of high value customers and the
steps taken to improve the cost effective running of the
business were realised.
Statutory turnover increased by 9% to £3,763m, and service
revenue by 12% to £3,525m, compared to 31 March 2001. Data as
a percentage of service revenue grew from 7% to 12%, driven by
increases in penetration of the customer base and higher usage
of SMS text messaging, in addition to the doubling of other
data revenues. The rise in SMS has been influenced by new
gaming product offers and event driven promotions. Other data
revenues have doubled due to the launch of products such as
WAP over GPRS, OfficeLive delivering Outlook Services powered
by Microsoft Mobile Software, and Vodafone Content Delivery
Platform.
The growth in Vodafone UK's statutory operating profit, before
goodwill amortisation and exceptional items, accelerated
during the second half of the year. The annual growth of 18%
was achieved through 9% growth in the first half year and 26%
in the second.
Proportionate EBITDA, before exceptional items, increased by
21% to £1,294m, and the proportionate EBITDA margin increased
by 3% to 34%.
Vodafone UK's share of mobile service revenue in Oftel's
quarterly review stands at 33%, increasing its lead to 5.5%
points over the second placed UK network. At 31 March 2002,
Vodafone UK had 13,186,000 registered customers, which
represents an increase of 7% over 31 March 2001. Of total
customer growth, 79% arose from contract customer connections,
reflecting the emphasis on connecting higher value customers
as net contract customers grew from 4,294,000 to 5,014,000,
and contract churn which fell from 30% to 26%. This improved
performance reflects the increased focus on retention
activities and the continuing impact of network and customer
care investment. Prepaid churn increased from 22% to 28%, due
to specific focus given to disconnecting inactive customers,
who represented 11% of the registered customer base at 31
March 2002. Blended churn increased from 25% to 27%.
Both contract and prepaid ARPU stabilised during the course of
the year. ARPU for the contract customer base for the twelve
months to 31 March 2002 increased marginally to £555 compared
to £550 for the year to 31 March 2001. This movement was in
part favourably affected by Vodafone UK developing the ability
to accurately allocate inbound calls to contract or prepaid
customer segments. ARPU for the prepaid customer base for the
twelve months to 31 March 2002 declined from £156 to £118,
due, in part, to the allocation of incoming revenues explained
above. Both contract and prepaid ARPU also suffered dilution
as a result of the migration of higher value prepaid customers
to contract tariffs. Compared to 31 March 2001, blended ARPU
decreased from £306 to £276. However, current ARPU trends
indicate that blended ARPU is stabilising.
The average cost to connect for contract customers rose
slightly from £114 for the year to 31 March 2001 to £116,
reflecting the impact of the increased proportion of higher
value customers connected in the year. The average cost to
connect for prepaid customers fell from £53 to £26 for the
year to 31 March 2002 as a result of the decision to reduce
the distribution incentives to improve the profitability of
this market segment.
Vodafone UK continued its investment in network infrastructure
to improve network quality and maintain Vodafone's position as
the UK's leading network. Vodafone continues to be recognised
in Oftel surveys as the leading UK network, with a level of
customer satisfaction of 95%. During the year, Vodafone UK
successfully delivered a re-balancing of resources into new
product development, product management and customer
development activities as well as a reduction in headcount of
10%. Other customer focused developments introduced during the
year include demonstration bars throughout the retail chain
and the first ever mobile phone contact, information and
assistance zone at Heathrow Airport.
Other Northern Europe
During 2002 the Group successfully rolled out its rebranding
programme, as operations in Ireland, the Netherlands and
Sweden migrated to the single Vodafone brand (formerly
Eircell, Libertel and Europolitan, respectively). In addition,
network partnership agreements were signed with Teledanmark
Mobile and Radiolinja to deliver dual-branded products in
Denmark and Finland.
The Group's interests in Northern Europe, excluding the UK,
reported continued growth in financial performance. Statutory
turnover increased by 56% to £1,669m and proportionate EBITDA,
before exceptional items, increased by 60% to £970m. While the
results of Vodafone Ireland (acquired in May 2001) were
included in the Group's results for the first time, underlying
EBITDA growth, excluding Ireland, remained high at 32%.
Proportionate EBITDA margin increased from 32% to 35%,
demonstrating the effectiveness of the strategic realignment
towards acquisition and retention of high value customers and
focus on cost efficiencies. In the Netherlands, Vodafone was
particularly successful in implementing these strategies and
reported an increase in EBITDA margin from 27% to 33% together
with a proportionate revenue increase of 17%. In Belgium,
Proximus maintained strong EBITDA margin performance and
reported a 46% EBITDA margin for the year at the same time as
growing EBITDA by 26% year on year.
The registered venture customer base increased by 24% to
22,679,000. Vodafone Sweden, in a competitive market of three
operators, increased its customer base by 15% during the year
to 1,163,000. Vodafone Sweden's commitment to acquiring and
retaining high value customers is demonstrated by a customer
market share of 16% and a revenue market share of 25%.
Vodafone Ireland confirmed its status as the largest mobile
operator in Ireland, maintaining a market share of over 56%,
with year end registered customer numbers at 1,704,000,
representing growth of 10% since acquisition. In France, SFR
customer numbers have also continued to grow strongly with two
million net additions, representing a 20% increase in the
customer base.
Central Europe
Financial highlights Year ended 31 March
2002 2001 Increase
£m £m %
Statutory turnover - Germany 4,112 4,005 3
- Other Central
Europe 65 26 150
------ ------
4,177 4,031
------ ------
Statutory total - Germany 1,429 1,085 32
Group operating
profit/(loss) - Other Central
(note 1) Europe 114 12 850
------ ------
1,543 1,097
------ ------
Proportionate - Germany 4,101 4,102 -
turnover (note 2) - Other Central
Europe 593 221 168
------ ------
4,694 4,323
------ ------
Proportionate - Germany 1,837 1,421 29
EBITDA (note 2)
(before exceptional - Other Central
items) Europe 231 57 305
------ ------
2,068 1,478
------ ------
Proportionate - Germany 45% 35%
EBITDA margin
(note 2) - Other Central
Europe 39% 26%
(1) - before goodwill amortisation and exceptional items
(2) - comparatives are presented on a pro forma basis for the
acquisition of Mannesmann
Germany
The Group's German operations reported strong profit growth
and made good progress with a number of corporate initiatives,
including rebranding the business from D2 Vodafone to
Vodafone. Statutory turnover increased 3% to £4,112m, as a 5%
increase in service revenues was partly offset by the
reduction in equipment revenues as a result of the lower
customer growth, particularly in the prepaid customer segment.
Service revenues were boosted by the continued growth in
messaging and data revenues, which increased 18% in the period
and now represent 14% of total service revenues. Total Group
operating profit, before goodwill amortisation and exceptional
items, increased 32% to £1,429m, principally as a result of
the increased service revenues, and reduction in equipment
subsidies and lower connection commissions.
The proportionate EBITDA margin increased from 35% to 45%, and
Vodafone remains the most cost efficient and profitable mobile
network operator in Germany.
The record customer growth experienced in the year ended 31
March 2001 was not repeated in this financial year as the
change in focus towards acquiring high value customers and
customer retention initiatives impacted on total growth.
Vodafone Germany ended the period with a registered customer
base of 21,489,000, an increase of over 2% compared to the
previous period, as the contract customer base increased by 9%
to represent 43% of the total. This was partially offset by
the effect of increased blended churn rates from 11% to 23% as
inactive prepaid customers were removed from the customer
base. Contract churn moved from 19% to 18%, whilst prepaid
churn moved from 4% to 27%.
Both contract and prepaid ARPU declined compared to the
previous year, falling from Euro 611 to Euro 559 and from Euro
151 to Euro 110, respectively. Blended ARPU decreased from
Euro 378 to Euro 298. However, ARPU over the past twelve
months has stabilised. Following the reduction in equipment
subsidies and reduced commissions, the total average cost to
connect reduced to Euro 81, with the cost to connect for
prepaid customers reducing to Euro 24. The cost to connect
for contract customers decreased to Euro 156.
Other Central Europe
The Group's other interests within Central Europe also had a
successful financial year, with all the Group networks
increasing their registered customer bases and making good
progress with strategic initiatives. The results also
benefited from inclusion of a full year's results from
Swisscom Mobile.
The operations within Other Central Europe ended the period
with a registered customer base of 7,599,000 customers, an
increase of 23% since 31 March 2001. In Hungary, the mobile
telecommunications market grew significantly in the period,
with penetration rates increasing from 34% at March 2001 to
52% at March 2002. Vodafone Hungary benefited from this
increase, more than doubling its registered customer base to
556,000 and increasing its market share in the period. Of the
closing registered customer base, over 91% are connected to
prepaid tariffs.
In Poland, Polkomtel consolidated its position as the second
largest of three operators in terms of registered customers.
Polkomtel has continued to focus on high value customers and
remains extremely competitive in the corporate segment. As a
result, Polkomtel is the leader in the Polish market in terms
of blended ARPU. At 31 March 2002, 55% of the total registered
customer base were contract customers. The Polish market
continues to offer excellent growth potential as market
penetration, at 28%, remains one of the lowest in Europe.
Swisscom Mobile retained its leadership position in the highly
penetrated Swiss market, with an estimated market share of
67%, and continued its focus on the retention of high value
contract customers. During the period, Swisscom Mobile
completed a review of its tariff structures and increased its
registered customer base by 114,000. In September 2001,
Vodafone made the final payment of CHF2.3 billion (£1 billion)
in respect of the acquisition of its interest in Swisscom
Mobile in cash.
Southern Europe
Financial highlights Year ended 31 March
2002 2001 Increase
(note 3)
£m £m %
Statutory turnover - Italy 3,711 2,967 25
- Other Southern
Europe 3,032 1,512 101
------ ------
6,743 4,479
------ ------
Statutory total - Italy 1,267 1,015 25
Group
operating profit - Other Southern
(note 1) Europe 805 434 85
------ ------
2,072 1,449
------ ------
Proportionate - Italy 2,838 2,323 22
turnover (note 2) - Other Southern
Europe 2,271 1,198 90
------ ------
5,109 3,521
------ ------
Proportionate - Italy 1,295 1,048 24
EBITDA (note 2)
(before exceptional - Other Southern
items) Europe 836 402 108
------ ------
2,131 1,450
------ ------
Proportionate - Italy 46% 45%
EBITDA margin
(note 2) - Other Southern
Europe 37% 34%
(1) - before goodwill amortisation and exceptional items
(2) - comparatives are presented on a pro forma basis for the
acquisition of Mannesmann
(3) - comparatives have not been restated for the effect of a
change in the accounting for distributor discounts on
prepay top-up cards
Italy
During the year ended 31 March 2002, Omnitel Vodafone improved
its financial performance. Statutory turnover, which in 2002
includes distributor discounts on prepay top-up cards,
increased by 25% to £3,711m. Service revenues grew 27% to
£3,547m, principally as a result of the increase in the
average customer base. On a comparable basis, statutory
turnover and service revenues grew by 20% and 22%
respectively. Data revenues increased 83%, and now account
for 9% of service revenues, primarily due to the increase in
SMS text messaging, reflecting successful promotional
activities and the introduction of interconnection charges for
SMS traffic. Proportionate EBITDA, before exceptional items,
increased by 24% to £1,295m. Adjusting the turnover for 2001
onto a comparable basis for distributor discounts on prepay
top-up cards, the proportionate EBITDA margin, before
exceptional items, increased from 43% to 46%, largely as a
result of revenue growth combined with the continued focus on
controlling acquisition and retention costs and operating
expenses.
Omnitel Vodafone has maintained its position as the second
largest operator in the 90% penetrated Italian mobile market,
increasing its registered customer base by 13% to 17,711,000.
The blended churn rate for the year increased from 14% to 19%
at 31 March 2002, in line with expectations given the level of
customer acquisition experienced over the past few years.
However, the implementation of company loyalty programmes,
with an enrolled customer base of 6,900,000 subscribers, and
which have successfully targeted high value customers,
resulted in ARPU stabilising and confirmed Omnitel Vodafone's
customer satisfaction leadership position.
Blended ARPU, after adjusting the previous period's ARPU to
include distributor discounts on prepay top up cards within
service revenues, slightly decreased from Euro 352 to Euro 345
for the year. Contract ARPU increased from Euro 756 to Euro
769, while prepaid ARPU remained relatively stable during the
year despite the voluntary reduction in fixed-to-mobile rates.
The average cost to connect for customers, already very low in
Italy, slightly declined from Euro 37 to Euro 35.
In June 2002, Omnitel Vodafone will be renamed Vodafone
Omnitel and will migrate to the Group's red, SIM-shaped logo,
whilst retaining the Omnitel name.
Other Southern Europe
The Group's rebranding programme was successfully rolled-out
across the other operations within Southern Europe, with
Airtel, Panafon Vodafone and Telecel Vodafone all migrating to
the single Vodafone brand during the period.
The Group's other interests within Southern Europe showed good
progress and include the effect of stake increases in Airtel,
Spain, which increased from 73.8% to 91.6% during the period.
Proportionate EBITDA, before exceptional items, more than
doubled to £836m.
Excluding Italy, the Southern Europe Region ended the period
with a registered venture customer base of 16,211,000
customers, an increase of 21% since 31 March 2001. In Spain,
Vodafone's venture customer base increased by 11% to 7,905,000
and registered strong EBITDA growth due to a combination of
increased service revenues, significant decreases in customer
acquisition costs and improved operational efficiency. In
March 2002, Vodafone Spain lowered its prepaid and contract
tariffs as part of its plans to strengthen the business and
increase its commercial effectiveness.
In Greece, Vodafone continued to achieve satisfactory results
despite a reduction in contract tariffs in July 2001, as a
result of continued competitive pressures. The 2002 financial
year also saw the completion of the acquisition of two service
providers by Vodafone Greece, Unifon and NextNet, giving
Vodafone an extensive nationwide network of retail outlets in
Greece that services over 86% of the registered customer base.
Extra GSM spectrum was also acquired during the period
allowing Vodafone the opportunity to further improve the
quality of service for its customers.
In Portugal, Vodafone maintained its position as the second
largest operator, increasing its customer base by 15% to
2,838,000 at 31 March 2002.
Vodafone Albania achieved a positive EBITDA result after
operating for only eight months, making it one of the fastest
mobile start-ups to pass a break-even position in Europe.
Operations in Malta and Romania achieved satisfactory results
both in terms of customer growth and profitability.
AMERICAS
Financial highlights Year ended 31 March
2002 2001 Increase
£m £m %
Statutory turnover - Verizon Wireless - -
- Other Americas 12 9 33
------ ------
12 9
------ ------
Statutory total - Verizon Wireless 1,332 1,288 3
Group operating
Profit (note 1) - Other Americas (15) (51)
/(loss)
------ ------
1,317 1,237
------ ------
Proportionate - Verizon Wireless 5,475 4,901 12
turnover
- Other Americas 163 107 52
------ ------
5,638 5,008
------ ------
Proportionate - Verizon Wireless 1,889 1,673 13
EBITDA
(before - Other Americas 18 (46)
exceptional items)
------ ------
1,907 1,627
------ ------
Proportionate - Verizon Wireless 35% 34%
EBITDA margin
- Other Americas 12% (42%)
(1) - before goodwill amortisation and exceptional items
Verizon Wireless
Verizon Wireless is the leading mobile telecommunications
provider in the United States, a highly competitive
marketplace, which currently consists of six nationwide
competitors and a number of regional and smaller rural
carriers. During the period, proportionate turnover increased
12%, principally reflecting increases in the customer base and
average use, coupled with the effects of continued analogue to
digital base migrations. Service revenue increased 19% for the
year to 31 March 2002.
Due to the economic slowdown in the US, net customer growth
has slowed considerably from prior years. However, Verizon
Wireless increased its customer base by 9% over the period and
ended the year with a registered customer base of 29,585,000,
of whom 94% were on contract plans.
Verizon Wireless was the first major US carrier to launch
CDMA2000 1XRTT technology in major metropolitan markets which,
including additional markets activated in April and May 2002,
brings total coverage to 130 million people - 60% of the
Verizon Wireless national footprint. The service, branded
Verizon Wireless Express Network, increases the capacity of
the network without the need for additional spectrum and also
offers higher data rates.
The migration to digital price plans has helped to reduce the
effect of competitive pressures on blended ARPU, which
increased from $551 to $576 for the twelve months ended 31
March 2002. Also, in August 2001, Verizon Wireless launched a
new digital 'Free-Up' prepaid programme. Roaming revenues
declined in the second half of the year, principally due to
the reduction of travel within and to the United States in the
wake of September 11. Successful intercarrier roaming rate
renegotiations which reduced both roaming revenues and roaming
cost of service year on year also contributed to the decline.
The average cost to connect increased from $138 to $150 per
gross additional customer as a result of increased equipment
subsidies and trade commissions. Annualised blended churn
decreased from 31% to 29% due to the company's churn
management programmes.
Verizon Wireless was the winning bidder for 113 licences in
the Federal Communications Commissions (FCC's) spectrum
auction. However, these licences were then subject to
litigation and whilst negotiations between NextWave, the FCC
and winning auction bidders (including Verizon Wireless) did
initially produce a settlement, this was not ratified by US
Congress. Verizon Wireless subsequently filed a suit against
the FCC to argue that the FCC should immediately return the
$1.7 billion which Verizon Wireless paid as a deposit towards
the full payment of the licences. On 29 April 2002, it was
announced that the US Government had repaid $1.5 billion of
the deposit to Verizon Wireless. The resolution of the
applications for these licences remains a matter to be
considered by the US Supreme Court following a petition by the
FCC, a ruling for which is not expected until at least Spring
2003.
In February 2002, Verizon Wireless announced plans to move to
a more streamlined organisational structure including a
reduction in the number of its employees.
Other Americas
Grupo Iusacell currently provides wireless services in seven
of Mexico's nine regions, covering a population of 90 million
people and representing approximately 90% of the country's
total population. Roaming is provided in the two remaining
regions. Currently, market penetration in Mexico is 22%.
Mexico's cellular market has continued to expand, with
customer growth largely driven by prepaid products. At 31
March 2002, Iusacell had 1,995,000 registered customers, an
increase of almost 13% since the date of acquisition. Of the
total registered customer base, 81% were prepaid customers.
During the year the Group restructured its Globalstar service
provider operations in North America. As part of an
arrangement with Globalstar LP, the Group entered into an
agreement for the sale of a portion of the Group's equity
stake in Globalstar LP and its Globalstar service provider
businesses in the US, Canada, the Caribbean and other
miscellaneous undeveloped territories for a nominal
consideration. The finalisation of the sale of the US and the
Caribbean businesses is awaiting appropriate regulatory
approvals.
ASIA PACIFIC
Financial highlights Year ended 31 March
2002 2001 Increase
£m £m %
Statutory turnover - Japan 3,323 - -
- Other Asia
Pacific 749 713 5
------ ------
4,072 713
------ ------
Statutory total - Japan 523 140 274
Group operating
Profit (Note 1) - Other Asia
Pacific 66 65 2
------ ------
589 205
------ ------
Proportionate - Japan 4,397 1,897 132
turnover
- Other Asia
Pacific 976 874 12
------ ------
5,373 2,771
------ ------
Proportionate EBITDA - Japan 991 360 175
(before exceptional - Other Asia
items) Pacific 330 227 45
------ ------
1,321 587
------ ------
Proportionate - Japan 23% 19%
EBITDA margin
- Other Asia
Pacific 34% 26%
(1) - before goodwill amortisation and exceptional items
Japan
Proportionate turnover for Japan has substantially increased
from the prior year, reflecting the increases in the Group's
effective ownership in J-Phone during the last two financial
years. The results of J-Phone have been fully consolidated
from 12 October 2001. Previously J-Phone had been accounted
for as an associated undertaking. Further details of the
transactions completed during the year ended 31 March 2002 can
be found on page 20. Post tender offer, J-Phone was rebranded
and now operates as J-Phone Vodafone.
Penetration in the Japanese cellular market reached 54% by the
end of March 2002. J-Phone Vodafone consistently captured
market share, with 2,219,000 net customer additions recorded
in the period. This has resulted in J-Phone Vodafone becoming
the second largest operator in Japan at 31 March 2002. One of
the key drivers of this growth has been the success of J-Phone
Vodafone's 'sha-mail', the popular picture-messaging service
for customers with camera-enabled handsets. To ensure such
growth continues, further enhancements have been made
recently, in particular the launch of the video clip message
service 'movie sha-mail'. Customers using sha-mail now account
for one-third of J-Phone Vodafone's total customer base. The
sha-mail service is part of a sophisticated mobile interactive
service, J-Sky. As of March 2002, 82% of J-Phone Vodafone's
customer base subscribed to the J-Sky service.
The success of sha-mail has also resulted in a further
increase in data and SMS revenue as a percentage of total
service revenues, which increased from 11% in April 2001 to
20% in March 2002, as it attracted new customers and increased
usage amongst existing customers. However, blended ARPU
declined in the period from Yen 105,971 to Yen 91,903, mainly
attributable to reductions in mobile to mobile connection
fees. Total average costs to connect reduced from Yen 39,047
to Yen 34,145 following a reduction in acquisition incentives
and equipment subsidies.
With control over the J-Phone Group passing to Vodafone on 12
October 2001, and the merger of the J-Phone operating
companies to create a single structure completing on 1
November 2001, the Group has taken immediate steps to increase
the operating efficiency of the company and implement the
Group's standards of internal control. New senior management
have been appointed and an in depth review of many aspects of
J-Phone Vodafone's operations has commenced. An early benefit
of this has been the reduction in capital expenditure for the
fiscal year from a budget of Yen 592 billion to actual
expenditure of Yen 348 billion by focusing on 3G investment
and therefore limiting the need for investment in 2G
infrastructure. J-Phone Vodafone has also benefited from an
improved purchasing position as a member of the Vodafone
Group.
Other Asia Pacific
Statutory turnover from the operations in the Other Asia
Pacific region, which relates to the Group's Australian and
New Zealand operating companies, increased by 5% to £749m
during the year ended 31 March 2002. Proportionate EBITDA,
before exceptional items, increased by 45% to £330m, including
a first full-year contribution from China Mobile (Hong Kong)
Limited. The proportionate EBITDA margin improved from 26% to
34%.
In Australia, Vodafone faced particularly challenging market
conditions, with customer growth slowing from the levels
experienced in previous years. To address these challenges,
the Australian business was restructured to improve
operational efficiency and this has involved significant
reductions in both capital and operating expenditure,
including a 28% reduction in the workforce. The business also
took positive action to churn inactive customers and lead the
Australian market in announcing a phasing-out of equipment
subsidies, including the introduction of the no plansTM
tariff. Notwithstanding these challenges, proportionate EBITDA
growth of 15% and net customer growth of 35,000 was achieved
as the business continued to focus on active customers and
acquiring high-value customers. Blended ARPU did decline over
the period from AUS$796 to AUS$688. However, recent monthly
trends indicate ARPU stabilisation, with particular increases
in SMS and data revenues.
In New Zealand, strong growth continued with a 49% increase in
EBITDA and a 5% point improvement in EBITDA margin with the
business focusing on controlling costs whilst growing revenues
by 30%. Registered customer numbers increased 23% to
1,095,000, which was achieved despite the business taking
steps to reduce equipment subsidies. Total blended ARPU,
although declining from NZ$731 to NZ$636, showed signs of
stabilising in recent months with increases in SMS and data
revenues.
In Fiji, despite poor economic conditions, strong results were
achieved, with 69% growth in EBITDA, an 11% point improvement
in EBITDA margin, 36% growth in revenue and a 47% increase in
customer numbers.
China Mobile (Hong Kong) Limited increased its registered
customer base by 22,402,000 during the year ended 31 March
2002, with prepaid customers representing 93% of net
additions. As a result, China Mobile (Hong Kong) Limited now
has more prepaid customers than contract customers. The trend
towards prepaid customers resulted in a reduction in monthly
ARPU to Rmb 135. However, EBITDA margins were maintained as a
result of savings on leased line expenses, interconnect
charges and continued improvements in operating efficiency.
SMS usage volumes continued to grow strongly with 6.1 billion
messages sent in 2001 alone, an almost fourteen fold increase
over the previous year.
The Group's working relationship with China Mobile (Hong Kong)
Limited was further strengthened during the period as both
parties established working groups to share and develop best
practice. Furthermore, in January 2002, the Group made a $35
million investment to acquire a 9.99% investment in Aspire
Holdings, China Mobile (Hong Kong) Limited's subsidiary set up
to develop its mobile internet service delivery platform and
take responsibility for wireless data research and
development. In May 2002, the Group announced that it plans to
invest a further $750 million to increase its stake in China
Mobile (Hong Kong) Limited to approximately 3.27%, gain the
right to appoint a non-executive director to the China Mobile
(Hong Kong) Limited board and receive future cash dividends on
its investment.
MIDDLE EAST AND AFRICA
Financial highlights Year ended 31 March Increase/
2002 2001 (decrease)
£m £m %
Statutory turnover 306 308 (1)
Statutory total Group 161 213 (24)
operating profit (note 1)
Proportionate turnover 488 448 9
Proportionate EBITDA 211 227 (7)
(before exceptional items)
Proportionate EBITDA margin 43% 51%
(1) - before goodwill amortisation and exceptional items
In Egypt, Vodafone maintained strong customer growth with a
47% increase in customers to 1,718,000. The proportionate
EBITDA margin remains high at 39%, despite the challenging
conditions created by the Egyptian pound's devaluation.
In South Africa, Vodacom achieved further growth, with a 28%
increase in customer numbers. Proportionate turnover grew by
7% as underlying turnover growth of 34% was largely offset by
a weakening of the South African Rand. Vodacom continued to
expand into Africa and in December 2001, formed a joint
venture in the Democratic Republic of the Congo.
Safaricom continued to perform well in its second year of
operation in Kenya. Customer numbers have shown a year on
year growth of 368%, giving Safaricom a market share of 58%.
Other Operations
The Group's other operations mainly comprise interests in
fixed line telecommunications businesses, including Arcor in
Germany, Japan Telecom, Cegetel in France and Vodafone
Information Systems (formerly Vodafone Telecommerce), an IT
and data services business based in Germany, as well as the
Group's 50% interest in Vizzavi Europe, the Group's joint
venture with Vivendi Universal.
Statutory turnover for the Group's other operations for the
year to 31 March 2002 increased to £2,103m, from £953m in the
comparable period, primarily due to the inclusion of the
Group's interest in Japan Telecom, which was acquired on 12
October 2001. Proportionate EBITDA, before exceptional items,
increased by £218m to £191m in the year ended 31 March 2002,
primarily as a result of the inclusion of Japan Telecom.
Arcor
Arcor provides fixed network services in Germany and has
retained its position as the leading private operator and the
strongest competitor to Deutsche Telekom with a total market
share of more than 6%, which equates to 40% of the total
alternative German fixed line operator market share. Arcor's
statutory turnover for the year increased by £23m to £953m.
During the period, Arcor saw its contract voice customer base
increase by 7% to 2.4 million customers. Traffic volumes
increased by 30% to over 21 billion minutes. However, the
effect of these increases was almost entirely offset by tariff
reductions, reflecting the competitive environment.
In January 2002, a contract between Arcor and Deutsche Bahn AG
to carve out Arcor's railway specific telecommunication and
service business into a new company was signed, and the sale
completed in April 2002. See page 21 below for further
details. Arcor also disposed of its point to multipoint
business, Arctel, increased its shareholdings in the three
existing city carriers ISIS, Wucom and Netcom and concluded
the integration of the o.tel.o business into its operations
with a view to realising future cost synergies.
Japan Telecom
The fixed line operations of Japan Telecom continue to face a
very competitive environment, following the lifting of
restrictions on market entry. In particular, with the new
carrier designation service 'My-Line', which enables customers
to pre-select their local or long-distance carrier, having
been introduced in May 2001, maintaining market share in the
consumer voice segment has been challenging. In response,
Japan Telecom has been focusing on high-growth business
opportunities and working to deliver innovative data products
and services. Sales of IP data related services for corporate
customers have been specifically targeted. Promotion of the
next-generation IP network 'PRISM' via optical fibres has
significantly expanded Japan Telecom's corporate customer
base.
Following completion of the Group's tender offer in October
2001, which increased the Group's interest in Japan Telecom to
66.7%, management at Japan Telecom began a corporate wide
initiative to identify and refocus Japan Telecom on its core
businesses and strengths, reallocate disproportionate
resources to the core operations, drive costs out of the
business and implement the Group's standards of internal
control. Furthermore, to enable the company to quickly support
change, the organisational structure of the company is being
realigned to centre around three customer facing business
units and ensure a swifter and more focused decision making
process that will better serve customers. Japan Telecom also
intends to further strengthen senior and mid-level management.
Others
Cegetel is the second largest fixed line operator in France.
The company offers broadband services in addition to fixed
line services. In Germany, Vodafone Information Systems
provides a range of services to external customers as well as
other Group companies, including billing and IT solutions, m-
commerce products and solutions and mobile business services.
STRATEGIC DEVELOPMENTS
Products and services
The Group's global strategy is to provide mobile voice,
messaging, business, information and entertainment services to
its global customer base. One of the ways in which it achieves
its strategic objectives is by developing and enabling others
to develop a diverse range of compelling services for
customers. A comprehensive product and application roadmap
governs the development of new services, and the introduction
of new network enabling capabilities, which are designed to
converge into a highly integrated customer experience.
During the 2002 financial year, a number of significant
milestones were achieved which underpin the Group's overall
strategy for the development of voice and data-related
applications. New voice services, including Eurocall, Virtual
Home Environment, assisted roaming and prepaid roaming, were
all successfully introduced, enabling the Group to both gain
new customers in key market segments and achieve incremental
revenue growth from existing customers.
The rollout of the single Vodafone brand has been
significantly progressed during the year, with fourteen Group
subsidiaries now operating as 'Vodafone'. Subsidiaries in
Italy and Japan currently running with dual brand names are
expected to migrate to the single Vodafone brand within the
next year. With most of the Group now operating as
'Vodafone', it is important that the Group generates and
enhances global awareness of the single brand and its values.
Accordingly, during the year, Vodafone's first ever global
advertising campaign, 'How are you?', was successfully
launched in most of the single branded markets. This included
advertising campaigns designed to support the Group's global
product strategy, targeted particularly at high value business
roaming customers. To drive global brand awareness further,
Vodafone became a principal sponsor of the Ferrari Formula One
motor racing team. The Ferrari sponsorship supports our brand
positioning and serves as a communications platform for
increasing usage of services. It also serves as a strong
focal point for internal staff programmes.
The strength of the Vodafone brand led to partner agreements
with two networks, Radiolinja, the leading private mobile
operator in Finland, and Teledanmark, the leading Danish
integrated operator. Under the terms of these agreements, the
partner networks promote Vodafone roaming services under a
dual brand to their international travellers and corporate
customers. Vodafone customers will also recognise Radiolinja
and Teledanmark as trusted partners and will enjoy from them
services with the same look and feel that they already receive
from other Vodafone networks across Europe. The agreements
also extend the Group's global footprint without equity
investment and prove the remarkable strength of the brand as
well as the global service set.
With GPRS networks (or their equivalent) now open for service
in all the Group's major markets, providing an enhanced
foundation for a variety of additional services previously
unavailable to customers, the Group's focus will continue to
be the rolling-out of compelling applications to appeal to its
global customer base. In March 2002, the Group became the
first mobile operator to offer a commercial GPRS data roaming
service across twelve European countries.
Products now being offered by the Group include innovations
such as location based services which have been developed as a
Group-wide standard. In Germany, the location based service
allows customers to, amongst other things, access information
about nightlife in their current location and has been
recognised as being the best new location based service in
Germany. In other parts of the Group, location based services
are also being marketed as fleet management tools. New SMS-
based services are now available, such as 'Mplay' in Italy,
offering improved 'chat' and 'games' functionality, with
others planned for future launch following the signing of
agreements with selected partners to provide premium content
services via SMS. Other services also include mobile payment
facilities, including credit card authorisation functionality,
unified messaging, which has been launched in six European
countries to date, and more generic services to allow
customers to access the internet either through their handset,
PDA or laptop computer.
For the corporate customer, the Group offers services that
provide mobile access to corporate intranets and office-based
applications at speeds typically faster than those available
through standard fixed telephone lines. In the UK, Office Live
promotes remote PDA based access to corporate e-mail and in
America, Verizon Wireless is currently conducting trials of
its next generation services which allow more secure and
faster access to corporate intranets. Similar services,
targeted specifically at business users, are also available in
other Group networks.
Over the course of the next few months, the Group intends to
build upon these new products and services by offering an
extended range of applications to customers. This will
include picture messaging and the availability of camera-
phones in the Group's European markets, building on the
success of J-Phone Vodafone's 'sha-mail' service in Japan and
camera-phones. Vodafone in Germany and Portugal are already
offering initial picture messaging services.
In January 2002, a revised business and operational model for
the Vizzavi joint venture was agreed, focusing on content
services for the mobile customer base with a view to
increasing customer usage and revenue. At 31 March 2002,
Vizzavi's registered user base was 7.5 million, compared with
0.7 million at 31 March 2001. The creation of new services and
applications will also be supported by the Group's global
developer programme, 'Via Vodafone', which provides the
framework for developers to create mobile applications and
market them to the Group's customer base using web-based
interfaces providing access to the core network services.
The development of the Group's 3G networks is an important
element of the Group's strategy to further enhance voice and
data revenue. 3G networks offer significantly increased
spectrum capacity, allowing the Group to continue to grow both
its customer base and also the volume of services and product
functionality. 3G networks will also be more capital
efficient than GSM networks, which should lead to further
improvements in the Group's capital intensity ratio, allowing
for increased free cash flow generation.
A key objective is to make new services available on an end-to-
end basis and implement technologies which give a consistent
level of service quality across the Group's global footprint.
Accordingly, the Group has developed a technology roadmap
which is setting guidelines for the optimum deployment of
future network resources, complementing the newly launched
GPRS data services with 3G technology. In order to achieve a
successful delivery of 3G capability, a global 3G programme
management organisation has been put in place. Central to
this programme are the close relationships with key
infrastructure suppliers. The Group has only four suppliers of
3G infrastructure to give greater focus, reduce complexity and
also ensure timely delivery.
All of the services to be offered over GPRS will seamlessly
function in a 3G environment, making the transition to 3G a
straightforward and evolutionary step for customers. The
extra capacity that 3G provides will also allow additional
services to be offered such as streaming and download for
video, film and other services which require the transfer of
data at higher speeds, as well as video telephony and
interactive gaming. In Japan, for example, J-Phone Vodafone
has already extended its popular 'sha-mail' service to offer a
video-clip messaging service - 'movie sha-mail'.
At 31 March 2002, 3G licences have been secured or, in the
case of Vodafone Ireland are expected to be secured, in all
the territories in which the Group operates and in which such
licences have been offered. Accordingly, over the course of
the next 18 months the Group intends to open for service 3G
networks in its major markets, with J-Phone Vodafone expected
to be the first to open in June 2002. J-Phone Vodafone's 3G
network will be compatible with international global
standards, opening up seamless international roaming into and
out of Japan for the first time. The Group's main European
markets are expected to follow suit later in the year.
Initially, 3G networks will be opened to conduct a series of
'friendly-user' trials, leading up to full-scale roll-out
following completion of user product acceptance testing.
The Group's work in relation to the development of products
and services, the rollout and management of the Group's brand
and other significant commercial initiatives are increasingly
managed on a global basis to secure the synergies that can be
derived from the Group's scope and scale.
The Group's global account management team forms relationships
with customers who have a significant requirement for multi-
national business. The Group's global account strategy has
secured multi-national business with a broad base of customers
including KPMG, Deloitte & Touche, Unilever, Chubb and Henkel.
The global account strategy is enhanced by Vodafone's
commitment to use systems integrators to develop corporate
solutions.
The globalisation of the Group's network infrastructure
purchasing relationships, including more than twenty operating
companies in which the Group has an interest, is well
advanced. Areas covered include network infrastructure,
handsets, IT, interconnect and indirect expenditure. This
process is yielding significant purchasing synergy benefits
and provides for a co-ordinated approach to the roll-out of 3G
networks and associated products and services.
Vision and Values
In November 2001, the Group announced the launch of a major
Vision and Values programme with the aim of developing a
single culture based around common values and achieving
employee behaviour that reflects a 'one company' attitude and
supports the values behind the single global brand.
The Group's vision is to be the world's mobile communications
leader - enriching customers' lives, helping individuals,
businesses and communities be more connected in a mobile
world. The creation of the unified culture is being supported
through a set of Vodafone values centred on customers,
results, our people and the world around us.
The Board is committed to this programme and places a high
priority on effective employee communications to ensure
employees both understand the Company's strategy and are also
committed to Vodafone's Vision and Values. Accordingly,
during the twelve month period ended 31 March 2002, both the
Chief Executive and the Group Chief Operating Officer have
personally led the roll-out of this programme which will cover
all the Group's operating companies, involving over 67,000
employees.
Investing in the Group's employees through learning and
development continues to be an important element of the Vision
and Values programme, ensuring the future success of the
Group. Policies to assist employees in reaching their full
potential and a wide variety of learning opportunities are in
place. Furthermore, programmes are provided to help employees
meet the training requirements of their chosen professional
institution, thereby continuing to raise the level of
professionalism in the Group.
Corporate Social Responsibility
The Board places significant importance on environmental and
community issues and has already been recognised as taking a
leading position on environmental and community issues through
its inclusion in both the FTSE4Good and the Dow Jones
Sustainability indices.
The Group understands concerns about the potential health
risks arising from electromagnetic fields emitted by mobile
telecommunications masts and handsets and is committed to
funding research into the radio frequency emissions from both
handsets and network infrastructure alike. Across the Group,
radio frequency emission levels from base stations are
independently monitored, with information made publicly
available through planning processes and, in certain cases,
dedicated websites. The Group has also committed funds to
country-specific research projects and contributes to the
funding of several research projects of the World Health
Organisation, as well as contributing to other national
organisations. Current scientific research continues to
conclude that exposure to the radio frequency emissions from
telecommunications masts and handsets does not cause any
adverse health consequences. However, research into this area
is continuing.
During the year the Group has made significant progress with
its Corporate Social Responsibility (CSR) initiatives,
building on the commitments made in its first ever CSR report,
Vodafone future, published in June 2001. The Group's
2000/2001 CSR report can be found on the Group's website
www.vodafone.com/about/responsibility.htm. The Group's
2001/2002 CSR report will be available on request or on the
Group's website from 13 June 2002.
This information is provided by RNS
The company news service from the London Stock Exchange
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