Vodafone, one of the world’s largest carriers and a bellwether for European operators, announced disappointing numbers for its first fiscal quarter ending in June.
The company reported service revenue of approximately $15.68 billion (₤9.98 billion). While this is a .6% increase year-over-year, it was forecasted at .9% and represented a decline from the previous quarter’s growth of 2.3%.
While the carrier did well in Germany with 4.2% growth in service revenue, southern Europe’s continued economic troubles were reflected in Vodafone’s numbers. In Italy, the carrier’s service revenue declined by 7.7% and in Spain by 10%.
“Despite the difficult market conditions, particularly in southern Europe, we continue to make progress in the key areas of data, enterprise and emerging markets, while maintaining tight control of our cost base,” said Victorious Colao, Vodafone’s chief executive. “We remain focused on driving through significant improvements to our customers’ experience through our ongoing investment in our networks, stores and IT platforms.”
In addition to southern Europe, Vodafone’s service revenues in the United Kingdom were down .8%. The company’s service revenue did continue to grow in India, but at 16.9%, less than the 20% growth it had in the previous quarter.
Fixed revenue grew by 3.4% to represent 8.7% of group service revenue. Vodafone now counts 6.3 million fixed broadband customers.
Vodafone emphasized the progress it has made in strengthening its business, citing proposed acquisitions of Cable & Wireless Worldwide and TelstraClear as well as network sharing agreements in five markets.
Analysts noted that Vodafone’s results were not totally unexpected, but added that they did show the carrier’s emerging markets were having problems making up for struggles in more established markets.
“The significant point from this result is that emerging markets are no longer sufficiently rescuing poor performances from Vodafone’s European markets,” explained Emeka Obiodu, senior analyst of telco strategy at Ovum, in a report. “Ovum’s research in 2008/2009 highlighted that telecoms revenues tend to lag economic trends; people firstly experience deteriorating personal finances before they start cutting back on telecoms spend. Therefore, as long as the economic headaches persist in southern Europe (and with concerns mounting in the [United Kingdom] too), the road ahead will be uncertain for Vodafone and other Europe-centric telcos.”
Obiodu did add that one bright spot for Vodafone was its 45% stake in U.S.-based operator Verizon Wireless, which yesterday reported robust results.
“Had Vodafone’s management capitulated to shareholder pressure few years ago to sell the stake, the Vodafone group’s results would have even being more worrying,” Obiodu added.
Verizon Wireless last year paid out $10 billion to parent companies Verizon Communications and Vodafone.