Weak Europe takes its toll on Vodafone numbers

Weak Europe takes its toll on Vodafone numbers

19 JUL 2013

Revenue declines in Germany and the UK, as well as a continued squeeze on its operations in Italy and Spain, meant that Vodafone posted its fourth consecutive quarterly fall in group service revenue for the three months ended 30 June.

Group service revenue dropped by 3.5 per cent year-on-year on an organic basis, to £10.16 billion, in Vodafone’s fiscal first quarter.

A slowdown and increased price competition saw service revenue drop by 5.1 per cent in Germany, Vodafone’s biggest European market, to £1.8 billion.

To strengthen its competitive hand in Germany, Vodafone says it expects to complete its €7.7 billion takeover of Kabel Deutschland in calendar Q4.

The UK business has similarly struggled, with a service revenue drop of 4.5 per cent, to £1.5 billion. Vodafone attributed the UK decline to a mixture of intense price competition and macroeconomic weakness.

In the struggling southern European economies of Italy and Spain, Vodafone suffered further sharp falls. Service revenue in Italy slumped 17.6 per cent, to just over £1 billion.

Spain’s service revenue slid 10.6 per cent, to £870 million.

Again, cheaper offers from rivals, a tough economic backdrop, as well as cuts in mobile termination rates – particularly in Italy – have all taken their toll.

One encouraging sign is that the operator is making some progress with its Vodafone Red tariffs, which offer customers unlimited calling and texting so long as they sign up to a mobile data package.

In this way, Vodafone hopes it can weaken the threat of so-called over-the-top players, while boosting mobile data revenue.

In Germany, ‘mobile in-bundle revenue’ increased by 7 per cent, to £918 million, as a result of growing Vodafone Red adoption. In Italy, mobile in-bundle revenue jumped 25.9 per cent, to £383 million.

Across the group, Vodafone Red is now available in 16 markets, with 5.2 million subscribers signed up. Mobile in-bundle customer revenue growth grew 9.5 per cent and now represents 46 per cent of group mobile service revenue (and 56 per cent in Europe).

“Although regulation, competitive pressures and weak economies, particularly in Southern Europe, continue to restrict revenue growth, we continue to lay strong foundations for the longer term,” Chief Executive Vittorio Colao said in a statement, adding that Vodafone 4G is live in ten markets.

Other LTE-related updates include the fact that 15 per cent of Vodafone’s European data traffic is now generated via 4G networks, while a European LTE user typically consumes twice as much data a month compared to a 3G user.

Vodafone is enjoying better performances from its operations in emerging markets and Verizon Wireless, in which it holds a 45 per cent stake, but not enough to compensate for the heavy losses in Europe.

In Turkey, service revenue grew by 15.5 per cent, while India’s jumped 13.8 per cent, to £1.1 billion, driven by a higher rate per minute and a strong growth in mobile voice minute volumes.

At Verizon Wireless, service revenue grew 7.2 per cent, helped by an expanding subscriber base and increased smartphone penetration.

Vodafone gave no update on the future of its 45 per cent stake in Verizon Wireless, on which there has been much speculation about a potential sale.


Ken Wieland

Ken has been part of the MWC Mobile World Daily editorial team for the last three years, and is now contributing regularly to Mobile World Live. He has been a telecoms journalist for over 15 years, which includes eight...More

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