Vodafone confident on revenue outlook after tough quarter

Feb 06 2014, 16:24 IST
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Vodafone is investing to improve the speed and coverage of its networks after selling its US arm in a $130 billion deal. Vodafone is investing to improve the speed and coverage of its networks after selling its US arm in a $130 billion deal.
SummaryVodafone has reported sharp falls in organic service revenue in the last 18 months.

Britain's Vodafone said it was confident a growing number of customers and the take-up of faster 4G services would help lift its revenue, after reporting yet another poor quarter due to fierce competition in Europe.

The world's second-largest mobile operator has reported sharp falls in organic service revenue in the last 18 months, due also to regulator-imposed price cuts and European consumers reducing the number of calls they make during the economic downturn.

The company, which is investing to improve the speed and coverage of its networks after selling its U.S. arm in a $130 billion deal, said organic service revenue was down 4.8 per cent in the three months to the end of December, year-on-year.

That was in line with forecasts and followed a 4.9 percent drop in the previous quarter.

The company, second only to China Mobile globally in terms of subscribers and Britain's third-largest company by market capitalisation, also confirmed its full-year outlook.

Thursday's trading update showed quarterly organic service revenue - which strips out items such as handset sales, currency and acquisitions - was down 9.6 percent in its larger European division, which accounts for a third of the firm's revenue.

It was up 5.5 per cent in its faster growing emerging market division of Africa, Middle East and Asia Pacific.

"In Europe, conditions are still difficult, and we continue to mitigate these challenges through ongoing improvements to our operating model and cost efficiency," Chief Executive Vittorio Colao said.

"In addition, the shift to 4G is gaining momentum and we have seen improving mobile customer net addition trends. We are therefore optimistic that our revenue performance will begin to improve as regulatory headwinds ease and customer appetite for video and content services increases."

In order to improve its offering, Colao said the group was in talks with several local content providers, which could mirror the deals it did in Britain where it offers a music service or sports clips with its faster 4G offering.

INTENSE PRESSURE

Vodafone described the pressures in Europe, where it competes with the likes of Telefonica, Orange and Deutsche Telekom, as intense.

That fits with the only other trading updates given so far for this quarter by the big telecom groups, with Nordic operator TeliaSonera posting quarterly profit below expectations due to weak trading in its developed markets.

Dutch telecoms group KPN also reported weaker-than-expected quarterly profits earlier this week, as frugal consumers and stiff competition hit its mobile division.

For Vodafone, service revenue in

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