Vodafone keeps earnings target on track despite revenue pressure
Mobile phones giant Vodafone has reported a revenue hit amid woes in Italy and Spain and an ongoing price war in India.
In chief executive Vittorio Colao's final set of figures before handing over the reins in October, the company reported a 4.9% fall in group revenues to €10.9 billion for its first quarter to June 30.
Its service revenue growth slowed to 0.3%, with €11.1bn posted for the quarter, as Vodafone blamed increased competition in Italy and Spain.
This dragged European service revenues down 0.4% and took the shine off a 7.2% hike for its Africa, Middle East & Asia Pacific (Amap) division.
India also saw "intense" competition, with service revenues plunging 22.3%, due largely to the country's price war.
Vodafone is waiting for clearance for a deal to merge Vodafone India and Idea Cellular, which is set to complete by the end of August and will help it weather the tough conditions in the market.
In the UK, Vodafone said its underlying performance continued to recover, but reported figures showed an ongoing impact from regulation and UK handset financing.
Service revenues in the UK fell 4.9%, steeper than the 3.4% fall in the previous quarter, although Vodafone said that, stripping out regulation and UK handset financing, it saw growth of 1.8%.
The group also cheered a strong UK broadband performance, with 52,000 net customer additions in the quarter, which helped fixed service revenues grow 5.3%.
Despite the quarterly revenue hit, Vodafone confirmed it was on track for full-year underlying earnings growth of between 1% and 5% as it also continues to slash costs.
Mr Colao said: "The majority of our operations performed well, with ongoing momentum in Germany, further underlying recovery in the UK and continued good growth in Amap, all of which helped to offset increased competition in Italy and Spain."
The group's overall performance - including good progress in reducing absolute operating costs for the third year running - provides us with the confidence to reiterate our outlook for the year.
Vodafone announced in May that Mr Colao will step down on October 1 after more than 10 years at the helm.
Mr Colao, who took on the role in July 2008, will be succeeded by group chief financial officer Nick Read, who will become chief executive designate from July 27.
Mr Read will be replaced by deputy chief financial officer Margherita Della Valle on July 27, which is the date of Vodafone's annual shareholder meeting.
Vodafone also recently confirmed an €18.4 billion deal that will see it snap up a raft of Liberty Global assets across Europe.
It has agreed to acquire operations in Germany, the Czech Republic, Hungary and Romania in a move that it said would help it become "the leading next generation network owner in Europe" with a total reach of 110 million homes and businesses, including wholesale arrangements.
