Vodafone revenue and profit drop as European troubles continue

But growing mobile data use and enterprise mobility give hope for the future

Vodafone's revenue dropped 4.2 percent for its fiscal year to March 31, because of tough economic conditions, particularly in Southern Europe.

The operator's group revenue dropped to £44.4 billion (US$67.8 billion) for the year ended March 31, and net profit fell sharply from £7 billion to £673 million.

Behind those numbers are Vodafone's problems in Southern Europe where revenue was down by 16 percent. The effects of "severe macroeconomic weakness were intensified by strong competition," according to Vodafone said. Revenue rose 2.7 percent in Northern and Central Europe but fell 2.9 percent in Africa, the Middle East and Asia-Pacific.

Operators today struggling to balance falling revenue from voice and messaging services with growth in revenue from data. In Vodafone's case, revenue from the first two decreased by £3.8 billion, while data revenue grew by just £469 million.

Smartphone owners are the heaviest data users, and Vodafone reported that 54.8 percent of its European customers on a contract now have smartphones, up 9.9 percentage points year on year. At the same time, Vodafone also got a big boost from its fixed line business, where revenue grew by over £1 billion to £4.7 billion.

Vodafone is looking for growth in mobile data and fixed line services, as well as the enterprise sector and emerging markets. The operator has accelerated the integration of Cable & Wireless Worldwide and TelstraClear -- the two fixed line businesses Vodafone acquired during the year -- to help advance its enterprise and unified communications strategies, Vodafone said.

The tough economic climate in Southern Europe is likely to remain, but Vodafone is still bullish about its long-term prospects thanks to a growing appetite for high-speed data there and companies looking to make mobility a more integrated part of their IT infrastructure, it said.

Send news tips and comments to mikael_ricknas@idg.com

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