Organic revenue falls again for Vodafone Group as European units falter

25 Jul 2014

UK telecoms giant Vodafone Group has recorded its eighth straight quarter of revenue decline as its European units continued to struggle. With the group reporting a total turnover of GBP10.204 billion (USD17.2 billion) in the three months ended 30 June 2014, service revenues in the quarter stood at GBP9.446 billion, representing a year-on-year decline of 4.2% on an organic basis. Notably, in Vodafone Group’s European division service revenue fell by 7.9% to GBP6.450 billion against the corresponding period of 2013, or down 6.6% when excluding the impact of mobile termination rate (MTR) cuts. Nonetheless, while the company acknowledged that ‘competition and regulation continue to create a challenging operating environment’, it did, however, note that performance in several markets was beginning to show some signs of stabilisation quarter-on-quarter. Meanwhile, in the Africa, Middle East and Asia Pacific (AMAP) division service revenue was up year-on-year, standing at GBP2.894 billion, with the group highlighting the performance of its Indian unit, which saw service revenues climb by 10.3% y-o-y.

Capital expenditures in the quarter under review stood at GBP1.876 billion, almost double the figure reported a year earlier; such an increase was attributed to the start of Vodafone Group’s two-year, GBP19 billion investment programme, nicknamed ‘Project Spring’.

In operational terms, at the end of June 2014 Vodafone Group reported a total mobile subscriber base of 433.852 million, up from 430.834 million three months earlier, of which 80.9% were pre-paid accesses. The group’s four largest European units – Germany, Spain, Italy and the UK – all saw customer declines in the period, losing a combined 1.400 million in the three months to end-June 2014. Indeed, it was only in Hungary, Greece and Malta that the group saw customer gains in Europe over the quarter, with the European mobile subscriber total standing at 125.383 million at the end of the quarter, down from 127.148 million. By contrast, in AMAP it was only Egypt and New Zealand that saw net disconnections, and with the likes of Vodafone India adding more than 3.3 million new subscribers in the period, at the end of the quarter the group had 310.469 million mobile access across the AMAP region, up from 303.686 million three months earlier.

Away from mobile, Vodafone Group claimed to have made ‘significant progress’ with its unified communications strategy during the quarter, achieving residential broadband net additions of approximately 190,000, with continued growth in Germany, Italy, Spain and Portugal. Despite this, it noted that fixed line service revenue in Europe had fallen by 2.8% y-o-y, with growth in Italy and Spain offset by declines in Germany and the UK.

Commenting on the quarterly performance, Vodafone Group CEO Vittorio Colao said: ‘The year has started in line with our expectations. Through our commercial actions and investment, our performance is beginning to stabilise quarter-on-quarter in several of our European markets, with customer appetite for 4G services clearly growing … In unified communications, we have made further good progress on our strategy, continuing to implement our plans in several markets, and our customer growth trends demonstrate the strength of our commercial execution.’

United Kingdom,Vodafone Group,

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