Mobile phone giant Vodafone has reported a “mixed” year after its annual earnings fell in the face of continued pressure on European revenues.
The group has been growing strongly in emerging markets such as India, but its European arm is still weighed down by economic conditions, competition and regulator-imposed price changes.
Earnings fell 7.4 per cent to £12.8bn on an underlying basis in the year to March 31 and are set to decline again to between £11.4bn and £11.9bn this year as it focuses on a two-year investment programme. The £19bn plan, called Project Spring, aims to accelerate improvements to its network, resulting in wider 4G coverage in Europe and 3G coverage in emerging markets.
It is being funded through Vodafone’s 130 billion US dollar (£78bn) sale of its 45 per cent stake in Verizon Wireless to joint venture partner, Verizon.
One of the biggest transactions in corporate history, it resulted in around £50bn in shares and cash being returned to shareholders.
Chief executive Vittorio Colao said it had been a year of “substantial strategic progress” but described the operational performance as mixed.
He added: “In Europe, where we continue to face competitive, regulatory and macroeconomic pressures, we have taken steps to improve our commercial performance, particularly in Germany and Italy, and are beginning to see encouraging early signs.” The company has now launched 4G in all its major European markets, as well as South Africa, Australia and New Zealand.
It said its early experience shows that customers use roughly twice as much data compared to 3G data usage, driven principally by video streaming. Smartphone adoption continues to grow strongly in all markets and the increased availability of mobile applications and low cost devices has driven significant growth in data usage.
Data traffic in India increased 125 per cent year-on-year.