Vodafone, the second leading player on the domestic mobile telephony market posted 558 million-euro EBITDA for the fiscal 2007/2008 ended March 2008, an increase of 11% on the previous year. Vodafone's total revenues stood at 1.18 billion euros, an increase of 11% on the previous financial year, as a result of the increase in the number of customers (active SIM cards) by 12% (967,000 users) to 8.9 million customers.
Service revenues progressed by 10% to a total of 1.12 billion euros.
The 62 million-euro gap between total and service revenues comes from the sales of mobile phones, data cards, GSM accessories and SIM cards.
The company's profit margin remained constant at 47% of the total revenues, even though competition became harsher after Cosmote re-launched itself and RCS&RDS entered the market, while rates followed a downward trend. Orange, Vodafone's archrival has more than 10 million customers, while Cosmote has almost 4 million. The fact that the profit margin remained the same can be explained by the customer base structure, due to the fact that Vodafone managed to boost the number of post-paid users (that category of customers which generates the largest revenues) by 19% in the fiscal year. Vodafone also has a strong position on the corporate clients market.
Liliana Solomon, Vodafone Romania CEO says the financial results were affected by the decline on interconnection and roaming call rates, and especially by the exchange rate trend. Vodafone moved to billing customers in euros on October 1, 2007.
"The impact of regulations was surely felt in our results. We also had to cope with the massive depreciation of the dollar against the euro by approximately 20% (...), we increased (total revenues) by 310 million dollars, which is the highest growth in the company's history in absolute terms," Liliana Solomon told ZF.
Orange posted 307 million euros in revenues in the first quarter of 2008, an increase of 8% and 1.2 billion euros in 2007, up 24%.
The maturity of the mobile phone market, the pressure put by regulatory authorities and the increase of costs in the entire economy will induce a slow down in the growth pace of business, believes Liliana Solomon. Under the circumstances, she feels those companies operating at a loss will have a hard time coping.
Whereas 2007, when Cosmote, which fought aggressively for market share, and RCS&RDS launched mobile telephony services, was a year when operators clashed over every client, 2008 will be "the moment of truth" for the local industry, the chief executive of Vodafone Romania believes.
"I believe 2008 will be the 'moment of truth' in our industry. We have five mobile operators that provide telecommunications services, but three of them are losing money. Two of the three have a very aggressive marketing strategy, which is not viable over the long term. In our industry, one needs sizable investments in infrastructure and IT and these investments cannot be financed by a market strategy where one sells 1 euro for 50 cents. Not over the long term, at least, I believe," Liliana Solomon said.
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