Vodafone Revenues Fall As European Woes Continue

Vodafone blamed ongoing economic and regulatory difficulties in Europe for a 3.5 percent yearly fall in service revenue to £10.155 billion.

The telecommunications company attributed a 4.5 percent fall in revenue in the UK to price pressure, while its German business suffered a 5.1 percent drop.

Southern Europe is continuing to be problematic for Vodafone, with a contraction of its customer base in Spain resulting in a 10.6 percent decline in revenue and interference from regulators causing a significant 17.6 percent contraction in Italy.

Vodafone revenues fall

North and Central Europe generated £4.8 billion in revenue, a three percent decrease, while Southern Europe contributed £2.267 billion as a whole – 14 percent less than last year.

However, Vodafone’s performance in emerging markets, such as Turkey and India, remains strong, while its US joint-venture Verizon Wireless posted a 7.2 percent increase in revenue, highlighting its growing importance amid the speculation about its future.

Vodafone CEO Vittorio Colao was keen to point out its advances in fixed line broadband and the introduction of 4G in Spain, Australia and Czech Republic, bringing the total number of Vodafone 4G countries to ten.

This does not include the UK as Vodafone is not expected to launch LTE services until later this summer, possibly at the same time as a new model of the iPhone is released.

“We have made a good start to the year in our areas of strategic focus: growth in emerging markets has accelerated, we now have over 5 million customers benefiting from Vodafone Red, and 4G is live in ten markets,” Colao said.

“In addition, the proposed acquisition of Kabel Deutschland will create an excellent platform for our unified communications strategy in our most important market.

“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.”

Verizon Wireless strength

Vodafone’s ongoing problems in Europe meant it opted to retain £4.5 billion in dividends from Verizon Wireless earlier this year, although a potential sale of its stake in the joint venture has been touted.

Partner Verizon Wireless 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.

Earlier this month, Vodafone was accused of “patronising” pay-as-you-go customers after it decided to charge them for calls by the minute, not by the second, disguising the move as a way of making it easier for subscribers to keep track of their credit rather than as a money-making exercise.

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