Vodafone, the world’s largest mobile operator by revenue, posted a sharp drop-off in organic growth in the first quarter, dragged down by weak trading in Italy and Spain and a worse performance in Britain.
The British firm had outperformed its peers in the last year but the tough conditions across Europe forced the group to cut its medium-term outlook and write down the value of its assets by £4bn in May, as customers sought to save money by making fewer calls.
Vodafone posted first quarter group service revenue of £9.98bn, reflecting organic growth year-on-year of 0.6 per cent.
The 0.6 per cent compared with the surprisingly strong 2.3 per cent growth recorded in the fourth quarter, which benefited from a leap year.
“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,” said Chief Executive Vittorio Colao.
The group has benefited in the last year from strength in its emerging markets, Germany, Britain and Turkey which offset a slump in spending in Spain, Italy, Portugal and Greece, allowing the group to pay a record dividend.
In the first quarter, organic service revenue growth in Europe was down 1.6 per cent while the emerging markets division was up 6.1 per cent, showing slightly slower growth than some had expected.
“The UK has shrunk, Italy has missed our numbers and the emerging markets growth is still pretty good but it has clearly slowed in Turkey, India and South Africa,” said analyst Will Draper of Espirito Santo.
“It’s not a disaster, it’s just a slight miss. They’ve also reiterated their guidance for the full year, so I don’t think there’s anything catastrophic, I just think at the margin it’s a little bit weak.”