UK telecoms giant Vodafone Group has published its financial results for the quarter ended 30 June 2013, with the company reporting a 3.5% year-on-year decline in organic service revenue as a number of its European subsidiaries struggled amid the economic gloom.
In the three-month period under review Vodafone Group generated organic service revenue (including from joint ventures) of GBP10.155 billion (USD15.59 billion), while group service revenue excluding the joint ventures stood at GBP8.874 billion, down 1.3% against 2Q12 on an organic basis. Of particular note, the company revealed that turnover from its Northern and Central Europe division fell by 3.0% in the quarter compared to the year-earlier period, with revenues in Germany declining by 5.1%, compared to a 3.5% drop in 1Q13, with the group attributing this to ‘increased competitive intensity and lower market growth’. Further, the domestic unit of the group posted revenues 4.5% lower than in the second quarter of last year as a result of price pressures. Difficulties in Southern Europe continued meanwhile, with Vodafone’s Italian operations registering a 17.6% year-on-year drop in turnover, while Vodafone Spain saw a 10.6% decline as a result of customer losses and the increased popularity of discounted converged consumer offers in the market. As something of a bright spot, the group’s Africa, Middle East and Asia Pacific (AMAP) division recorded a 5.9% y-o-y increase in revenues for the quarter, with India seeing turnover rise by 13.8% as the pricing environment in that market stabilised. Further, the company reported service revenue growth at Vodacom of 3.2%, up from a decline of 0.7% in the previous quarter.
Capital expenditure in the quarter, including those at the group’s joint ventures, stood at GBP1.2 billion, higher than it was in 2Q12 as the Vodafone Group continued ‘to extend [its] high speed mobile data coverage across [its] footprint supported by targeted investment in unified communications capability’. Free cash flow meanwhile was flat y-o-y at GBP1.0 billion, while net debt at 30 June 2013, including joint ventures, was GBP24.9 billion, a GBP2.1 billion quarter-on-quarter improvement as a result of a GBP2.1 billion dividend from Verizon Wireless.
In operational terms, at the end of June 2013 Vodafone Group reported 456.633 million wireless subscribers, when including those belonging to its joint ventures, up from 448.776 million a year earlier. Of the group’s subsidiaries, Vodafone India and Vodafone Egypt were among the best performers, adding 2.680 million and 2.323 million customers in the three-months to end-June, respectively. On the flipside, Vodafone Australia recorded a loss of almost 200,000 subscribers in the quarter under review, while Vodafone Spain’s wireless customer base fell by 237,000. In the fixed broadband sector, Vodafone Group reported a total 6.526 million accesses at end-June 2013, up from 6.306 million a year earlier.
Commenting on the results, Vodafone Group CEO Vittorio Colao said: ‘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.’