Vodafone Group revenue declines 4.5% in Q1

22 Jul 2016

UK-based telecoms giant Vodafone Group has published its trading update for the three months ended 30 June 2016. At EUR13.377 billion (USD15.1 billion) total group revenue was down 4.5% year-on-year, including a 5.3 percentage point negative impact from foreign exchange rate movements. Of the total, the lion’s share was attributed to the group’s European operations, which generated EUR8.715 billion, while the Africa, Middle East and Asia Pacific division pulled in a total of EUR4.365 billion. Group service revenue stood at EUR12.278 billion in the first quarter of Vodafone Group’s 2016-17 fiscal year, down from a restated figure of EUR12.699 billion a year earlier. On an organic basis, however, group service revenue increased by 2.2%, while excluding the impact of mobile termination rate cuts the company said group service revenue grew by 2.4% y-o-y.

With the group noting that customer demand for data had continued to grow ‘very quickly’, Vodafone said that data traffic in the quarter had increased by 63%, while it confirmed it had doubled its 4G subscriber base year-on-year to 52.5 million across the 21 countries where it offers such services; around 5.7 million 4G accesses were added in the quarter. Despite this rate of uptake, Vodafone highlighted the fact that only 30% of its European customer base is currently taking a 4G service, saying this provides it with ‘a very substantial opportunity for future growth’. The company said that in its emerging markets, data adoption was also proving rapid, supported by a ‘significant network investment and the relative scarcity of fixed line internet access’. As such, the group’s 3G/4G mobile data customer base stood at 88.9 million at end-June 2016, up 50.7% y-o-y.

In line with Vodafone Group’s plans to become an integrated operator in its ‘main markets’, the company is currently marketing high speed broadband services to 74.4 million households across Europe, and through organic investment and acquisition it said 29.9 million of these premises are on-net. Here too it is claiming strong customer growth, reporting 13.7 million broadband subscribers at the end of the reporting period, having added 348,000 new accesses over the quarter, of which 254,000 were in Europe, and 81% of those were on-net. Again the company pointed to a current low level of on-net penetration – just 19% – as representing an opportunity for future growth.

Commenting on the quarterly performance, Vodafone Group CEO Vittorio Colao said: ‘We continued to make good progress during the first quarter. In Europe, our growth remains stable despite regulatory pressure on roaming revenue, with good performance in Germany, Spain and Italy while we are focussed on improving our performance in the UK. Our growth momentum in AMAP remains strong, with excellent performance in South Africa, Turkey and Egypt and ongoing recovery in India. Customers in multiple markets are attracted by our ‘more-for-more’ commercial offerings of larger data bundles and extra services, while we are seeing continued success with our fixed broadband and enterprise strategies.’

United Kingdom, Vodafone Group