Broadband competition and IPO plans drag down Vodafone profits

Vodafone NZ has reported a 16 percent decline, to $39.0m, in net profit for the 12 months to 30 June, blaming the slide on declining broadband profitability in a highly competitive market and planning for an initial public offering that was put on hold.

Vodafone said total revenue grew by $5.1m to $2,030m and that it had grown its mobile customer base faster than the rest of the market. “In addition, more customers took up our interest free handset offers, growing Vodafone’s estimated share of handsets sold in the past 12 months to 44 percent,” the company said.

Vodafone said it had added 92,000 customers in the year, compared to Spark’s 58,000 and 2degrees’ loss of 27,000.  Its estimate of 44 percent share of handset sales was based on “internal Vodafone Group analysis of global handset volumes.”

The company said it had retained its number two position in the fixed market “with strong growth in fibre broadband connections despite aggressive price competition.”

In FY18 it launched Vodafone TV, a TV service that brings Sky TV, free-to-air and a range of app-based entertainment services, including Netflix, together in one set-top box system.

CEO Russell Stanners said: “Market response to innovations we launched over the last year including Vodafone Pass and, more recently Unlimited Mobile with free Netflix, have enabled us to maintain our market-leading average revenue per user (ARPU) in mobile.”

The IPO that never was

Vodafone’s plans for an IPO were revealed by the Australian Financial Review in early November 2017, and Stanners and finance director, John Tombleson, presented plans to fund managers in New Zealand, Australia, Asia, Europe and the US in a roadshow later that year.

However Stanners told the National Business Review in April that the plan had been put on hold. “We obviously had a look at doing an IPO but there was a bit of a market wobble,” he was reported saying, and gave no indication as to when, or if, the plan would be revived.