Vodafone close to ending long-term revenue slide

Δημοσιεύθηκε: 5 Φεβρουαρίου 2015 - 09:24

Vodafone almost reversed a long-term slide in revenues in the third quarter on the back of the voracious appetite for videos and social media using smartphones on its superfast 4G networks.

Group service revenues declined by about 0.4 per cent in the third quarter to £9.8bn, excluding M&A activities and exchange rates, improving on a 1.5 per cent fall in the previous three months. However, excluding the impact of regulatory issues, service revenues managed to grow by 0.2 per cent.

The British group also posted an unexpectedly healthy return to growth in its home market, where revenues have been falling for several years. The last time Vodafone posted a growth in core mobile revenues at a UK or group level was in 2012.

Vodafone has increased the number of customers using its 4G mobile networks, who typically use much more data and pay higher tariffs, while also rolling out services in home broadband and TV in some European countries.

In the UK, for example, the increase in 4G customers helped to make December 2014 the busiest month ever for mobile data traffic, peaking as mobile users watched Manchester United score against Liverpool before Christmas.

Even so, analysts have questioned whether this rise in data travelling over its network can be converted into sustainable mobile revenue growth.

Vittorio Colao, chief executive, said: "We are confident that, over time, [the investment in next generation networks] will translate into further improvements in customer perception, average revenue per user and churn."

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The group's European businesses continued to drag down the group's overall revenues, even if the 2.7 per cent fall in regional sales has again slowed owing to less onerous regulations and improved consumer confidence in Germany, the UK and Italy. Operations in Italy and Spain continued to report heavy declines, however.

Africa, Middle East and Asia Pacific service revenues grew by about 6 per cent, slightly lower than the second quarter.

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Simon Weeden, analyst at Citi, said that results were better than expected on the back of mobile growth across the board, but added that the revenue numbers were "flattered" by lower margin carrier services in the UK and Germany.

"We have achieved another quarter of improving revenue trends in most of our major markets," said Mr Colao. "In Europe, improved commercial execution in both mobile and fixed over the last few quarters, combined with strong data demand and a more stable pricing environment, is supporting the steady recovery in the top line."

The return to growth in the UK will be particularly heartening for Vodafone given questions about the future of its British business in the wake of the acquisition of rivals EE by BT and O2 by Hutchison Whampoa

John Delaney, analyst at IDC, said that the proposed acquisitions "would leave Vodafone UK in a difficult position".

In response, Vodafone is set to announce plans to launch its own home broadband and TV packages in the UK to meet the threat from the enlarged BT Group.

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