Vodafone losing out to 'unlimited' rivals20/07/2012 - 10:07:45
Mobile phone giant Vodafone today revealed it was losing out to rivals offering “unlimited” deals as it posted a fall in UK revenues.
The group reported a 0.8% drop in underlying UK revenues to £1.2bn (€1.53bn) for the three months to June 30, against growth of 1.1% the previous quarter.
It blamed the fall on wider economic woes as customers cut down on their mobile phone usage and “significant” competition from rivals as they step up efforts to attract customers.
A raft of mobile phone firms have been launching tariffs offering unlimited data, calls and texts in recent months – such as 02 and 3 with its One plan.
Vodafone said: “Macroeconomic pressures continue to impact consumer confidence adversely.
“In addition there has been significant competitive pressure during the quarter resulting from competitors introducing a number of new unlimited tariffs.”
Shares in the group fell 3% as wider group revenues also showed the impact of the eurozone crisis, with underlying growth slowing sharply to 0.6% after a 1.6% fall across Europe in the first quarter.
Sharp declines in crisis-hit Italy and Spain took their toll, with sales in the regions down 7.7% and 10% respectively.
Slowing growth in its star performing markets such as India and Turkey added to the woes, with sales growth in India dropping from 21.1% in the fourth quarter to 16.2%.
Vodafone said it was sticking to its full year outlook despite the first quarter sales blow.
Chief executive Vittorio Colao said the group would continue to keep a tight rein on costs.
He said: “Despite the difficult market conditions, particularly in southern Europe, we continue to make progress in the key areas of data, enterprise and emerging markets, while maintaining tight control of our cost base.”
The group is also hoping the smartphone boom will help provide a boost as customers snap up products such as Apple’s iPhone and the Samsung Galaxy.
Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, described Vodafone’s trading update as “sluggish” and added the “situation in southern Europe continues to be troublesome both in economic and competitive terms”.
Vodafone is is in the process of acquiring Cable & Wireless Worldwide in a £1bn (€1.27bn) deal that will make it the UK’s second biggest telecoms operator, improve its network and allow it to make efficiency savings.
It hopes to complete the deal by July 27.
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