The impact of changes to mobile termination rates (MTRs) and lower consumer confidence affecting out of bundle usage led to Vodafone posting a modest 1.1% increase in third quarter service revenue of £1.267bn.
The operator said the figures, for the three months to 31 December 2011, were also offset by a strong third quarter performance in 2010. Sales growth was driven by enterprise and data growth. Data revenue increased by 13.2% to £220m due to higher smartphone penetration and an increase of handsets sold with a data bundle. Across Europe, Vodafone said smartphone penetration was up 3.1%, which it put down to take-up of integrated services and mobile products such as One Net.
A Vodafone UK spokesperson said stripping out the effects of the changes to MTRs would have resulted in an increase of revenue of 4.8%.
The operator said prepay continued to be challenging with overall customer numbers down 1,000 to 19.3 million. However, Vodafone UK said it added 174,000 contract customers during the quarter, which a spokesman attributed to the iPhone 4S. Prepay now accounts for 47.3% of Vodafone's customers.
Average revenue per unit was down marginally on 2010, from £21.70 to £21.40. Prepaid ARPU fell from £6.90 to £6.20 and contract from £37.10 to £35.20.
UK contract churn was 18%, with prepaid customers having a churn of 55.8%, making a total customer churn of 35.9%.
Across Vodafone Group, service revenue was up 0.9% to £10.61bn, or 3.1% excluding MTR cuts. The company said the economic crisis facing southern Europe was 'challenging' for the organisation. Group revenue was down 2.3% to £11.6bn. It said adjusted operating profit for the year is expected to be in the £11.4bn-£11.8bn range it predicted in November 2011.
Vodafone Group CEO Vittorio Colao said: 'We are continuing to make progress in the key strategic areas of data, enterprise and emerging markets. Despite the further deterioration of the southern European economic environment during the quarter, our broad geographic mix is delivering a resilient overall performance. Our improved value perception, strong cash generation and healthy balance sheet give us confidence that we can continue to execute well.'