Southern Europe batters Vodafone Group

Southern Europe batters Vodafone Group

The poor performance of Vodafone Group's southern Europe businesses has lead the telecoms business to post a pre-tax loss of £492m for the first half of this year.

Its UK business fared better in the six months to 30 September, posting an operating profit of £132m, although this was still down 28.6%% on the same period last year. The operator blamed the economy for its poor UK performance, saying it was hitting consumer confidence 'adversely' and reducing out of bundle spend. It also blamed rivals' unlimited tariffs, with T-Mobile launching the Full Monty and O2 launching its unlimited calls and texts On and On offer earlier this year, and Three continuing with its unlimited propositions. Vodafone launched its own unlimited offer, Red, in September, in response. Since launch, more than a third of a million customers have signed up. Vodafone UK said the drop in profits was down to it 'investing in retaining our existing customers and gaining new ones'.

Service revenue fell by 2.1% for the half year but would have been up 1.1% excluding changes to mobile termination rates. In the quarter to 30 September, service revenues were down 3.8% to £1.21bn. Voice fell 8.3% to £560m, although the network had a better performance in messaging, up 3.9% to £320m, and data, up 5.9% to £232m. Vodafone ended the quarter with 19.3 million customers, up 1.3% on its previous quarter. It had 293,000 contract net adds during its second quarter although it continued to describe the prepay market as 'tough' in the light of customers migrating to contract and the removal of handset subsidies.

More than half of its customers (50.2%) now own a smartphone, a high for the operator and up from 46.5% in the previous quarter and 44.4% last year. Around 80% of customers on contract own a smartphone and more than 90% of new contract customers take on a high-spec device.

Across the wider business, the challenges facing the Eurozone countries had a knock-on effect on Vodafone Group's figures. It wrote down £5.9bn relating to its Spanish and Italian business because of 'challenging market conditions and adverses movements in discount rates'.

Group service revenue was down 7.9% overall to £20.16bn for the half year, with service revenue across southern Europe down 18.1%. The business made a net loss of £1.89bn for the trading period.

Vittorio Colao [pictured], group chief executive, said: 'We have continued to make progress on our strategic priorities over the last six months, with good growth in data and emerging markets in particular. In the short-term, however, our results reflect tought market conditions, mainly in Southern Europe.'

Colao unveiled a new Vodafone 2015 strategy, which will focus on growing smartphone usage and the deployment of high speed networks and IT platforms.

'We remaing very positive about the longer-term opportunities, and our Vodafone 2015 strategy reflecs our confidence in the future. This is based on a new strategic approach to our consumer offer and pricing in Europe now being rolled out, an increasinf focus on unified communications in enterprise, and an attractive and growing exposure to emerging markets. Fundamental to the success of this strategy will be an ongoing enhancement of the consumer and enterprise customer experience through continuous investment in high speed data networks, and an increased drive towards standardisation and simplification across the Group to maximise cost efficiency and accelerate execution.'

Editor: Graeme Neill

Written by Mobile Today
Mobile Today


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