Difficult conditions in Europe sees further fall in Vodafone revenue

Vodafone has reported declining revenue for a second consecutive quarter as customers in Europe reduced spending amid slowing economies.

Service sales fell 2.6 per cent in the third quarter ended December 31st, excluding the impact of acquisitions and currency fluctuations, the company said yesterday in a statement.

Vodafone is eliminating jobs in Europe, including as many as 1,000 in Spain, to lower costs as consumers and companies cut spending amid soaring unemployment and contracting economies.

Modest

Service revenue fell 14 per cent in Italy, 11 per cent in Spain and 5.2 per cent in the UK, while rising in markets such as India and Turkey.

“These results are modest to weak,” said Andrea Devita, an analyst at Banca Akros in Milan, who recommends holding Vodafone shares.

“You have the economy, competition, you have regulation,” she said. “You can see it with all the operators reporting these days.”

Chief executive officer Vittorio Colao is increasingly relying on operations outside of Vodafone’s home market. Service revenue at Verizon Wireless, Vodafone’s US joint venture with Verizon Communications, rose 8.7 per cent last quarter.

Vodacom, Vodafone’s African business, boosted total sales 1.7 per cent last quarter.

Competitors

To persuade people to spend more in saturated markets, Vodafone and competitors are investing in so-called fourth-generation networks allowing faster data speeds for customers browsing the Web and watching video.

“We continue to face difficult market conditions in Europe and we expect those to continue in the coming year,” Mr Colao said yesterday on a conference call with reporters. “My answer on where is the money for investment going clearly indicates we believe in high speed.”

Meanwhile, Vodafone Ireland has retained its position as Ireland’s largest telecommunications provider with a total customer base of 2.45 million at the quarter ended December 31st, 2012. – (Bloomberg)