Market braces itself for negative results as fund managers suggest company has performed badly in both local and international markets
The market is bracing itself for negative results from Vodafone, an expectation that has caused the group's shares to plummet to their lowest level in more than three years.
As at 12 April, Vodafone was trading at 109.5p, with the company expected to disclose key performance indicators on 25 April, ahead of its 2002 results on 28 May.
UK fund managers say the company is thought to have performed badly both in its international and local markets, and meeting market expectations for businesses in Germany, Spain, the UK and Japan is proving to be challenging.
Martin Cholwill, UK equity fund manager at Axa Investment Managers, said: 'The key performance indicators will give an idea of the subscriber numbers and the average revenue per subscriber.'
'We think the average revenue per subscriber is going to be modest on a year-on-year basis. Since there is negative expectation about the announcement Vodafone's best outcome will be if it can get a flat revenue per subscriber.'
Fund managers are also forecasting that the mobile business will recover more slowly than the global economy, which itself is only seeing weak returns.
NTT DoCoMo, one of the Vodafone's international competitors, has announced that it expects to add 30% fewer new customers this year compared with last year. Hugh Grieves, co-manager of SG Tech Fund, said: 'In the wireless market, the basic services might not take off as much as was originally thought.
'The international market is a saturated one, while the European market is moving towards consolidation. Players can only grow by selling better services and at the moment the technology for generating these services has only recently been developed.'
Vodafone, however, has been pushing to provide better services to stay ahead of the market. It recently invested a further £6bn on top of the £3bn already invested on third generation (3G) licenses, according to Grieves.
'Services are limited to how fast they can process data,' explained Grieves. 'WAP has not been a big success because it was a slow service, but 3G has a higher rate of processing data.
'However, the mobile phone industry is not good at spotting what consumers want ' for example, it failed to market the text message service properly.'
Last year, Vodafone made a before tax loss of £9.76bn and is expected to make a more pronounced one this year owing to the $14bn asset write down it will have to make relating to its past acquisitions, including the German mobile company, Mannesmann.
The need to write down the value of these assets has been created by the bursting of the bubble in the telecoms and technology markets, which has led to the value of these businesses dropping significantly.
Vodafone Group provides mobile telecoms services. The company supplies customers with digital and analogue cellular telephone, paging and mobile data and internet services. Through a 50% joint venture with VivendiNet, the group operates the ˜VIZZAVI' brand internet portal company in Europe. Vodafone also has a 45% interest in Verizon Wireless.
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