Vodafone Annual Revenue Fall Blamed On Southern Europe

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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Vodafone will keep £4.5bn in dividends from Verizon Wireless to compensate for European losses

Vodafone has blamed tough economic conditions in Southern Europe and regulatory changes for a 4.2 percent year-on-year fall in revenue during the financial year ending 31 March 2013.

The world’s second largest mobile operator reported group revenues of £44bn and profits of £693 million over the last 12 months, but expects operating profits to almost treble from £4,728 to £12.8bn during 2014.

“We have faced headwinds from a combination of continued tough economic conditions, particularly in Southern Europe, and an adverse European regulatory environment,” complained Vittorio Colao, Vodafone. Group Chief Executive. “I remain very excited about our longer term prospects, as customer appetite for high speed data grows rapidly, and companies look to embed mobility into their corporate strategies.”

Vodafone revenues fall

Vodafone 4G AdvertsRevenues in Northern and Central Europe grew by 2.8 percent to £18.768 billion, with the UK network sharing joint-venture between Vodafone and Telefonica now operational, while the Cable and Wireless integration proceeding successfully.

There were also positives in emerging markets, with a 3.1 percent revenue increase to £12.345 billion reported in Africa, the Middle East and Asia Pacific, but there was a substantial decline of 16.7 percent in Southern Europe to £9.7635 billion.

Vodafone said that unemployment and continued macroeconomic weakness in Spain contributed to an 11.5 percent decline in service revenue, while regulatory changes and intense competition in fixed lines resulted in a 12.8 percent fall in Italy.

Verizon Wireless future

In light of its poor performance in these markets, Vodafone has opted to retain £4.5 billion in dividends from Verizon Wireless, the US joint-venture between the British operator and Verizon Communications.

Verizon Wireless reported an 8.1 percent rise in service revenues at a time when Vodafone has been strongly linked with a sale of its 45 percent stake in the company.

Verizon Communications has made no secret of its desire to assume full control and has reportedly been readying a £65 million bid for the business. However, the operator’s continued success is unlikely to dissuade Vodafone investors who believe that such a bid is nowhere near enough for its share.

Any sale would expose Vodafone to its problems in Europe, although it would be able to invest in its fixed-line operations. Another potential pitfall is that Vodafone would be subject to a possible capital gains tax of up to £13 billion on any transaction. This has led to suggestions that Verizon could launch a full takeover bid, although it has denied that it is interested in following that particular course of action.

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