Vodafone revenues plummet across Europe

Mobile operator Vodafone blames a weak economy and increased competition for drops in revenues across its major markets in Europe

Vodafone today confirmed a drop in revenue of 7.7%, with key markets in Europe performing badly.

Global revenue was £10.8bn for the three months ending 30 June 2012, but the UK, Germany, Italy and Spain all saw reported services revenues decline.

The worst culprit was Spain, showing a significant drop of 17.8% to reported service revenues of £935m. The UK fared better but still fell 1.4% during the quarter to just under £1.2bn.

Vodafone attributed the UK results to increased competition and a weaker economy, while Italy and Spain remained “challenging environments”.

The company did perform better in its emerging markets, with a 1.2% service revenue increase in India alone. However, Emeka Obiodu, senior analyst for telco strategy at Ovum, observed that the numbers hadn’t made up for the European losses.

“Although a poor result was expected from the deteriorating economic conditions in Europe in the quarter, it still makes uncomfortable reading to see reported revenue declines of 7.7% for the group,” he said. 

“However, the significant point from this result is that emerging markets are no longer sufficiently rescuing poor performances from Vodafone’s European markets.

“Our 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 UK too – the road ahead will be uncertain for Vodafone and other Europe-centric telcos.”

Obiodu admitted Vodafone was not the only company to face the impact of competition, further regulator-mandated price cuts and the poor economy, but he added: “Unfortunately, these dynamics are not going to change soon and the industry will have to work a lot harder to stabilise its performance while unlocking additional value in its business.”

Other figures from the results included a growth in data revenue of 17.1% – equating to £1.6bn or 16% of group service revenue – and a rise in connections of 12.6% for Vodafone’s global enterprise business.

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