Vodafone sees signs of European recovery in Q1 – Mobile World Live

Vodafone sees signs of European recovery in Q1

24 JUL 2015

Vodafone Group talked up the positives in its quarterly update, although it is still clearly facing challenges in its core European markets – and the company offered no further updates on its asset exchange discussions with Liberty Global.

Group service revenue decreased 2.9 per cent to £9.17 billion, although Vodafone highlighted that in organic terms – excluding M&A and foreign exchange movements – it saw growth of 0.8 per cent. Total revenue in the quarter to 30 June 2015 was down 0.9 per cent to £10.11 billion, with organic growth of 3.3 per cent.

The previous sequential quarter saw the company returning to organic service revenue growth after a prolonged period of shrinkage. With two consecutive quarters of improvement on this level, there is some hope that the company is turning a corner.

colaoBut Vittorio Colao (pictured), chief executive, cautioned that “our markets are, as always, highly competitive and we therefore have to remain very focused on efficiency, cost control, and excellent value and service to customers, while continuing to deliver a good return for shareholders”.

Vodafone recently confirmed it is in talks with media giant Liberty Global about an asset exchange, while nixing speculation that a merger may be on the cards. The company today offered a robust “no comment” on its progress.

Market performance
Weakness in Europe (down 6.2 per cent in reported terms to £5.97 billion) contrasted with strength in Africa, Middle East and Asia Pacific, where reported growth was 4.0 per cent to £2.99 billion.

The company highlighted “continued recovery in Europe”, although it is hardly out of the woods – in organic terms, revenue decreased by 1.5 per cent. By the same metric, the UK saw growth of 0.2 per cent, with declines of 1.2 per cent in Germany, 2 per cent in Italy, and 5.5 per cent in Spain.

In the UK, the company said that service revenue growth was supported by a “continued strong performance in mobile customer contract”. The company noted that during the quarter it launched its consumer broadband offer, initially in selected regions, with nationwide services to follow and a full TV launch to follow before financial year-end.

For Germany, and including Kabel Deutschland, continued customer growth was more than offset by declines in contract ARPU. Mobile service revenue was also impacted as earlier price reductions gained ground in the customer base.

In Italy, Vodafone noted an “improving trend” reflecting a more stable prepaid market as well as continued growth in enterprise and fixed line.

And Spain continued to be tough, with the company pointing out continued price competition across converged bundles.

For “other Europe” (Netherlands, Ireland, Portugal, Greece, Romania, Czech Republic and Hungary), service revenue increased by 0.6 per cent in organic terms, with “the majority of markets now in growth”.

Away from Europe, “AMAP continues to grow strongly”, with organic service revenue growth of 6.1 per cent. The region also continues to see strong customer growth, Vodafone said, with 4.3 million added during the quarter.

Service revenue in India increased by 6.9 per cent, although the growth rate is slowing due to the impact of regulation, including a termination rate cut. Continued customer base growth and 3G take-up offset continued pressure on voice.

Vodacom, Vodafone’s African arm, announced its own performance figures earlier this week.

Service revenue in AMAP beyond India and Vodacom increased 6.8 per cent organically, with strong growth in Turkey, Egypt and Ghana partially offset by declines in New Zealand and Qatar.

The company has 24.1 million 4G customers across 18 markets. This includes 5.5 million in Germany, 4.7 million in UK, 3.3 million in Spain and 2.7 million in Italy.

It has a total of 449.19 million mobile customers, of which 121.18 million are in Europe and 328.01 million are in AMAP.

It also has 12.31 million fixed broadband customers, the lion’s share of which are in Germany (5.52 million), Spain (2.85 million) and Italy (1.85 million).

Project Spring upgrade
Vodafone said that it has “continued to make great progress with Project Spring”, being 71 per cent of the way through its mobile programme, having modernised 80,000 mobile sites, added a further 36,000 2G, 47,000 3G, and 41,000 4G sites, and upgraded 71,000 sites with high-capacity backhaul.

In fixed line, Vodafone has extended its next generation cable and fibre networks to a further 820,000 households in the quarter, bringing the total number of households passed to 26 million, or 62 million including wholesale arrangements.

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Steve Costello

Steve works across all of Mobile World Live’s channels and played a lead role in the launch and ongoing success of our apps and devices services. He has been a journalist...More

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