The intense competition hitting the UK mobile market has battered Vodafone's service revenues, with the operator's UK business seeing sales fall by 4.5%.
Parent Vodafone Group singled out 'increased competitive intensity' in northern and central European markets in its results for the quarter ending 30 June. Germany, Vodafone Group's largest market, also saw sales drop 5.1%.
Service revenues in its UK business were £1.52bn, with the operator blaming the 4.5% service revenue decline on changes to mobile termination rates and the 'challenging' UK market. On a like for like basis, sales would have declined 2.5%, compared to a 3.5% decline in the previous quarter.
Over the course of the quarter, the UK business had 12,000 net losses, although it added a net 91,000 new contract customers. Vodafone said a quarter of its consumer contract service revenues are being generated by its Red contract, which offers unlimited calls and texts. It said the prepay market remains tough, with the operator losing 103,000 pay as you go customers, an improvement in the 399,000 customers lost in the previous three month period.
It added that smartphone ownership hit an all-time high of 57%. ARPU was down from £18.50 to £18.20. Churn improved from 34.7% to 27.9%.
No further details were given on its forthcoming 4G offer, with the operator sticking to its line that it was expecting to launch later this summer. It said the technical integration of Cable & Wireless Worldwide was 'progressing well', with several hundred UK mobile base stations integrated with the former CWW network.
Across Vodafone Group, underlying revenues were down 3.5%, with southern Europe continuing to struggle. It said it expected to complete its acquisition of Kabel Deutschland in the fourth quarter of this year. Vodafone Group only reports its profits during its half year and full year results.
Group CEO Vittorio Colao said: 'We have made a good start to the year in our areas of strategic focus: growth in emerging markets has accelerated, we now have over five million customers benefiting from Vodafone Red, and 4G is live in 10 markets. In addition, the proposed acquisition of Kabel Deutschland will create an excellent platform for our unified communications strategy in our most important market. Although regulation, competitive pressures and weak economies, particularly in southern Europe, continue to restrict revenue growth, we continue to lay strong foundations for the longer term.'
Author: Graeme Neill