Vodafone's Q2 revenue drops 7 percent

But CEO says data, enterprise and emerging markets are performing well

Vodafone Group reported a 7 percent year-on-year drop in revenue for the second quarter. The mobile phone giant saw year-on-year declines in almost every sector of its business, including voice, messaging and data revenue, and in most regions, the figures showed.

Vodafone's revenue for the quarter ended June 30 totalled £10.77 billion (US$16.8 billion), down from £11.66 billion a year earlier, it said Friday.

The only bright spots were small revenue rises in Turkey (up 3 percent) and Egypt (up 6 percent). It also received a boost from its minority stake in U.S. network Verizon Wireless, where data traffic drove service revenue up 8.2 percent.

"Ironically, the shining star in the results is Verizon Wireless. Had Vodafone's management capitulated to shareholder pressure a few years ago to sell the stake, Vodafone Group's results would have been even more worrying," said Emeka Obiodu, senior telco strategy analyst at Ovum.

Vodafone did, however, unload its stake in French mobile operator SFR during the course of the year. Excluding the effects of that sale, and of currency fluctuations, Vodafone said revenue grew organically by 1 percent -- its lowest organic growth rate in over a year.

One factor dragging down performance for some countries was a reduction in Vodafone's intra-group roaming fees for its customers roaming on another of its networks. By restating previous quarters' revenue to use the same roaming rates, it painted a more optimistic picture of service revenue performance in Germany (up 4.2 percent) and the U.K. (almost stable), but highlighted problems in Italy (down 7.7 percent) and Spain (down 10 percent). By this measure, Vodafone's service revenue also rose 6.3 percent in Africa, and 16.2 percent in India.

Despite those difficult market conditions in Southern Europe, Vodafone CEO Vittorio Colao said, the company continues to make progress in data, enterprise and emerging markets, while maintaining tight control of its cost base.

That wasn't enough to cheer analysts at Ovum, though.

"Emerging markets are no longer sufficiently rescuing poor performances from Vodafone's European markets," said Obiodu. "Telecoms revenues tend to lag economic trends: People first experience deteriorating personal finances before they start cutting back on telecoms spend. As long as the economic headaches persist in Southern Europe, and with concerns mounting in the U.K. too, the road ahead will be uncertain for Vodafone and other Europe-centric telcos."

Vodafone nevertheless maintained its forecast that adjusted operating profit will continue to grow, to between £11.1 billion and £11.9 billion for its full fiscal year, which ends March 31. The company did not provide profit figures for this quarter: It only reports profit half-yearly, for the periods to Sept. 30 and March 31.

Peter Sayer covers open source software, European intellectual property legislation and general technology breaking news for IDG News Service. Send comments and news tips to Peter at peter_sayer@idg.com.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.
Peter Sayer

Peter Sayer

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Tom Pope

Dynabook Portégé X30L-G

Ultimately this laptop has achieved everything I would hope for in a laptop for work, while fitting that into a form factor and weight that is remarkable.

Tom Sellers

MSI P65

This smart laptop was enjoyable to use and great to work on – creating content was super simple.

Lolita Wang

MSI GT76

It really doesn’t get more “gaming laptop” than this.

Jack Jeffries

MSI GS75

As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr

MSI PS63

The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?