Vodafone announced revenue growth that was below analyst forecasts, as the economic weakness in southern Europe took its toll on operating units in the region.
In a statement, the company noted that “we expect to continue to face challenging market conditions, but remain confident of executing well.” It has also maintained its guidance for the current year.
Vittorio Colao, Vodafone’s chief executive, said: “We are continuing to make progress in the key strategic areas of data, enterprise and emerging markets. Despite the further deterioration of the southern European economic environment during the quarter, our broad geographic mix is delivering a resilient overall performance.”
For the quarter to 31 December 2011, the company saw robust organic service revenue growth for its emerging markets operations – 23.5 percent in Turkey, 20 percent in India, and 8 percent for Vodacom.
It also saw “continued progress” in the UK (1.1 percent growth) and Germany (0.7 percent).
However, there was an increased organic service revenue decline in Italy, which fell by 4.9 percent, while the shrinkage in Spain was “broadly stable” at 8.8 percent.
On a group level, the company saw revenue of £11.62 billion, representing organic growth of 1.6 percent. Group service revenue was £10.61 billion, up 0.9 percent. Bloomberg reported that analysts had been looking for service revenue growth of 1.1 percent on an organic basis.
In several of the company’s markets, it also noted the effects of cuts in mobile termination rates in several of its largest markets, including Germany and the UK.
Looking forward, the company said it expects its adjusted operating profit to be in the £11.4 billion to £11.8 billion range, as previously stated. It also expects its EBITDA margin decline to be at a lower rate than in the previous financial year.
There were other positives among the numbers. There was “continued strong growth” for US affiliate Verizon Wireless, where organic service revenue increased by 6.8 percent due to strong customer and data revenue growth.
The company said that data revenue grew by 21.8 percent on an organic basis, led by increased smartphone penetration. This business now generates 14.8 percent of group service revenue, compared with 12.1 percent in the same period in the prior year.
Capital expenditure during the period was £1.5 billion, 5.2 percent down year-on-year, mainly due to “timing differences.” Year-to-date capital expenditure is up 3.6 percent to £4.1 billion, reflecting investments in the transmission network in Vodacom and the rollout of LTE in Germany.
The company also spent £1 billion on spectrum, primarily in Italy and Greece.