In December 2005, Vodafone provided certain financial metrics on its business in Turkey and these will be updated during this morning’s presentation. Vodafone reiterates its expectations of compound average annual revenue growth of 20% in US$ for Vodafone Turkey for the next five years, but is now targeting EBITDA margin percentage in the medium term to be in the high-twenties compared with mid-twenties previously.
The initial capital expenditure investment to turn around the business of US$1.2 billion is now expected to be around US$850 million. As a result of this and a better operating performance, Vodafone now expects to fund the initial capital expenditure investment from operating cash flows rather than through an additional US$1 billion of funding previously envisaged. In terms of adjusted earnings per share dilution, Vodafone now sees the transaction diluting adjusted earnings per share for two years, one year less than previously anticipated.
The principal driver of the EBITDA improvement in Vodafone Turkey has come from securing greater cost efficiencies than previously envisaged.
These include an innovative contract that has today been awarded to Motorola to modernise, expand and upgrade the existing 2G Radio Access Network based on the expected total cost of ownership. This contract was designed to optimise Vodafone’s capital expenditure in a way that is expected to minimise network operating costs and give greater price predictability over the eight-year contract period, while delivering on certain key performance requirements in areas such as capacity and coverage.
Arun Sarin said: “Our recent interim results highlighted the operational strength of our EMAPA region and the growing importance of emerging markets to the Group overall. Since May last year, we have enhanced our interest in all four of the businesses presenting today and we look forward to their continuing strong performance in the years ahead.”