Average revenue per user at Vodafone UK has hit its lowest amount since 2010, as service revenues fell by 5.2%.
The operator continued to be affected by fierce UK competition and the challenges hitting the economy. For the three months to 31 December, service revenue was £1.21bn, with voice and messaging sales continuing to fall. Growing smartphone adoption, up from 50.2% to 53.3% quarter on quarter, lead to an increase in data revenue from £220m in 2011 to £234m. Only the Netherlands has a greater smartphone penetration in Vodafone's markets.
Vodafone said that in addition to wider economic and industry issues, the operator was hit by low consumer confidence and a reduced out of bundle spend. As a result, average revenue per user was £20.30, its lowest amount since March 2010. Churn increased slightly on the previous quarter, from 34.9% to 35.5%.
The operator said it had 230,000 net additions during the quarter, with its customer base comprising 19.3m customers. It said another bright point was a 'positive' uptake of the new Vodafone Red tariff, which offers unlimited calls and texts. The trading quarter also marked the launch of the Cornerstone network sharing joint venture with O2.
Across Vodafone Group, the operator continued to be buffeted by southern European markets, with Italy down 13.8% and Spain down 11.3%. Group data revenue increased by 12.8%, mirroring the increased smartphone adoption. It is now worth £1.7bn, almost a sixth of total service revenues. Group service revenues were down 2.6% to £10.37bn, or down 0.4% if the effects of changes to mobile termination rates were stripped out.
However, the operator reiterated its predictions for adjusted operating profit, which is expected to be between £11.1bn and £11.9bn. Vittorio Colao, Vodafone Group CEO, said: 'Our results continue to reflect very difficult market conditions in Europe. We are addressing this through firm actions on cost efficiency, and continuing to invest in areas of growth potential. We continue to make progress in our Vodafone 2015 strategy, with good revenue growth in data and emerging markets, the launch of LTE services in another four markets and the acquisition of new spectrum.
'Vodafone Red, our new strategic pricing approach in Europe, has launched in five markets with positive early take-up, and to drive growth in enterprise we have created a new enterprise business unit and accelerated our integration plans for Cable & Wireless Worldwide.'
Southern Europe hit its enterprise sales, which were down 2.5%. It said its Global Enterprise business added 118 new accounts and grew service revenue by 3.6%. Its converged One Net business also increased users by 33.4% to 2.4 million, with fixed enterprise sales up 10.5%.
Author: Graeme Neill