Vodafone Group revenues fall as European woes remain

6 Feb 2014

UK telecoms giant Vodafone Group has reported a 3.6% year-on-year decline in group revenue for the quarter ended 31 December 2013, with total turnover standing at GBP10.977 billion (USD17.8 billion). Group service revenues for the three-month period amounted to GBP9.856 billion, representing a 3.3% drop from the same quarter in 2012, while on an organic basis Vodafone said that it had seen a decline of 4.8% y-o-y, or 2.4% when excluding the impact of mobile termination rate (MTR) cuts. While the British group highlighted the fact that its operations in emerging markets had ‘continued to generate strong organic growth supported by rapidly increasing mobile internet users and data usage’, it noted that the environment in Europe ‘remains challenging’ amid ‘intense macroeconomic, regulatory and competitive pressures’.

Indeed, across its European units Vodafone reported that organic service revenue fell by 9.6% in the quarter (or 7.0% excluding the impact of MTR reductions), with its German and UK subsidiaries recording service revenues declines of 7.9% and 5.1%, respectively, on the back of increased price competition. Spain fared even less well, seeing a year-on-year drop of 14.1% in service revenues in organic terms, though the company noted that this actually represented an improvement on the previous quarter as the operator increased post-paid mobile and broadband subscriber numbers. Italy, however, recorded a 16.6% drop in service revenue, with such a result said to have been driven by ‘further macroeconomic weakness and aggressive price competition’. In comparison to Europe, Vodafone Group’s Africa, Middle East and Asia Pacific (AMAP) division saw continued revenue growth across the majority of its units, with India in particular reporting a 13.2% annual increase in service revenues as customer numbers rose.

In operational terms, at the end of December 2013 Vodafone Group’s mobile customer base totalled 419.404 million, representing a 1.9% increase from the 411.456 million subscribers it had on its books a year earlier. Vodafone India registered the greatest number of new customers in the three months to end-December 2013, achieving net adds of 4.865 million and boosting its total to more than 160 million. At the other end of the spectrum, Vodafone Italy saw customer numbers fall by more than a quarter of a million, while the group’s Spanish unit was the worst performer, shedding some 312,000 in the three-month period to reduce its subscriber base to 13.964 million.

Commenting on the group’s quarterly performance, Vodafone Group CEO Vittorio Colao was cited as saying: ‘Our emerging market businesses are growing strongly, supported by consistent execution and accelerating demand for data. In Europe, conditions are still difficult, and we continue to mitigate these challenges through on-going improvements to our operating model and cost efficiency. In addition, the shift to 4G is gaining momentum and we have seen improving mobile customer net addition trends. We are therefore optimistic that our revenue performance will begin to improve as regulatory headwinds ease and customer appetite for video and content services increases.’

United Kingdom, Vodafone Group