Vodafone's revenues dip under sinking European market

Rebecca Jones 7 Feb 2013 | News - Comment now

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Vodafone's revenues dip under sinking European market

Vodafone's UK revenues declined 5.5 per cent in the last quarter of 2012

The world's second largest mobile phone operator, Vodafone (LON:VOD), reported a 2.6 per cent drop in revenue to £11 million in the final quarter of 2012 due to substantial declines in Europe.

Southern European markets performed the worst, with service revenues in Italy and Spain falling 14 per cent and 11 per cent respectively. In Northern Europe Vodafone suffered losses in both the UK and Germany.

Vittorio Colao, chief executive of Vodafone, commented: 'Our results continue to reflect very difficult market conditions in Europe. We are addressing this through firm actions on cost efficiency, and continuing to invest in areas of growth potential.'

One such area is Vodafone Red, the company's new cheaper pricing plan aimed at European customers, which Colao said had seen 'positive early take-up' now accounting for 48 per cent of revenue in the region.

Despite its European woes, the mobile operator continued to gain customers and revenue in emerging markets. Usage in Turkey increased 18 per cent in the final quarter and 9 per cent in India, although growth was slower than in previous months.

The boom in smart phones also helped to boost Vodafone's data revenues by 13 per cent to £1.7 million, buoyed by a greater take up in Europe where 33 per cent of the company's customers now use the devices.

Colao reassured investors that, despite the weaker revenue performance, adjusted operating profits for the 2013 financial year were still expected to be in the upper range of £11.1 billion to £11.9 billion.

He added: 'We continue to deliver strong revenue growth in data services and emerging markets. However, we expect to continue to face difficult market conditions in the coming year.'

Commenting on Vodafone's results, Emeka Obiodu, analyst at business and technology advisory service Ovum, said: 'Vodafone’s results reflect the challenging economic environment in its core market. Sadly, this is to be expected.'

She added: 'The challenge for Vodafone and other European operators is to stabilise their performance and ensure that their share of the customer's wallet holds firm.'

Markets remained largely unphased by Vodafone's results as shares rose more than 2 per cent to £1.74 by mid morning trading while the Share Centre continues to list the firm as a 'buy'.
 

Related topics: Large caps, UK equities

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