Vodafone’s ‘Project Spring’ sends its shares upward

Added 17th May 2016

Vodafone’s shares were up this morning following the publication of its year end results, trading 2.35% higher at £2.28.

Vodafone’s ‘Project Spring’ sends its shares upward


The FTSE 100 telecom operator experienced a rejuvenating year of organic growth in revenue and EBIDTA for the first time since 2008 thanks to its investment program.

Vodafone said it is enjoying the fruits of its £19bn Project Spring investment, reporting organic group revenue growth of 2.3% and a 1.5% increase in organic group service revenue for the year ended 31 March 2016. The most obvious growth was in Africa, the Middle East and Asia-Pacific where organic service revenue was up by 6.9%.

Vodafone’s group chief executive, Vittorio Colao, deemed Project Spring a major success, saying it “has transformed the quality of our technology, enhancing our customers' experience and enabling us to expand our Enterprise services. We achieved the first quarter of positive revenue growth in Europe since December 2010 while growth in AMAP accelerated with strong performance in South Africa, Turkey and Egypt. EBITDA margins also grew year-on-year, supported by our cost efficiency programmes.”

As the European economy showed signs of improving in Q4, including Vodafone’s largest markets, Germany and Italy, the company’s European organic service revenue stabilised and grew by 0.5%.

Organic EBITDA in Europe likewise rose by 1.7% to £7.7bn and the EBITDA margin improved to 28.8%.

In line with its Project Spring initiative, the company was able to extend its European 4G coverage to 87% of its mobile phone user base, just shy of its 90% target.

However, the telecom giant did struggle in the UK market, seeing a decline in service revenue of 0.3% for the year, which the company said reflected the operational challenges following its adoption of a new billing system.

The billing system migration in the UK also played a role in Vodafone’s mobile service revenue figures, which declined by 0.7% within the year. Despite this, the company said revenue from its bundled services and data add-ons grew, as did the number of 4G customers to 7.0 million by 31 March 2016.

Vodafone maintained the future looks bright in Europe:

“Going forward we intend to sustain our network leadership while modernising our IT platforms. We expect that cloud-based technologies will be the key enablers of our strategy, delivering large cost savings and increased agility. In mobile we aim to be ready to lead the industry in 5G across Europe, while significantly expanding our 4G coverage in emerging markets.” 

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