Vodafone revenues hit by Eurozone crisis and slow growth in India, UK

India News Bulletin Desk
Vodafone store
Image: Wikimedia Commons

Vodafone has seen a slowdown in its organic growth in its first quarter (April-June) because of poor trading conditions in Italy and Spain as well as slow growth in the UK and in India.

The British multinational telecommunications company reported a rise of just 0.6% in its group service revenue to £9.98bn for the quarter ending June as against a growth of 2.3% in the previous quarter. The marginal rise was also below the analyst forecast of 0.9%.

While Vodafone reported revenue growth in Germany and Turkey, it was offset by declines in most other markets including Italy, Spain, Greece and Portugal. Its service revenue in Spain dropped by as much as 10% and in Italy, revenues fell by 7.7%.

Its overall European organic service revenue declined by -1.6%, compared to a decline of -0.2% in the previous quarter. But it reported a larger decrease in total European revenues (8.2%), sparked by the unfavourable foreign exchange rate movements.

The company, which outperformed its competitors last year, also blamed the poor economic conditions and unemployment in southern Europe and in the UK for its lacklustre organic growth. Vodafone’s organic growth number is calculated by excluding the effect of mergers and acquisitions and foreign exchange movements.

“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,” the company’s chief executive Vittorio Colao said in the wake of its declining revenue.

More like this

The company will continue to invest in its networks, stores and IT platforms to improve speed and coverage, despite the revenue slowdown, Colao added. Vodafone also maintained its initial outlook projected for the 2013 financial year.

 Vodafone’s financial performance in the UK and in India

In the UK, its service revenue fell by -0.8% due to increased competitive activity and a weaker economy. This compares to the 1.1% growth in the UK it reported in the previous quarter.

However, Vodafone’s data revenue in the UK grew by 4.0%, fuelled by high smartphone penetration rate and growth in smartphones sold with a data bundle, the company said.

The UK-based company’s India revenue for the quarter was down 1% to £1.03bn (Rs 8,916 crore) from £1.04bn in the previous quarter - Q4 FY12.

Although it reported a service revenue gain of 16.2% in India in the April-June quarter, the growth was 4.9% lower than the previous quarter. The growth numbers in Q4 FY12 came from higher year-on-year customer growth in India.

The introduction of regulatory changes which impacted on the way integrated tariffs can be offered to customers affected its revenues this quarter, the company said.

There was also a lower rate of growth at Indus Towers (the Indian joint venture telecom tower company incorporated in 2007 by companies including Vodafone Essar) following a slowdown in tenancies from new entrants and a change in the pricing structure for some existing customers, it added.

Vodafone’s data revenue in India grew by 12.4% driven by the increase in data customers and higher penetration of data enabled handsets. By the end of June 2012, its active data customers in India were at approximately 31 million which included 1.7 million 3G data customers.

Shares in the mobile operator fell 2.9% to 178.38p during early Friday trading in London as a reaction to its Q1 FY13 financial results.

Comments powered by Disqus