Intense rivalry, currency crisis hits Vodafone

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Vodafone has been hit by a double whammy of tough competition hitting performance in the UK and Europe and a currency crisis blunting the impact of strong growth in emerging markets.

Service revenues for the mobile phone operator were down 4.8 per cent on an underlying basis for the quarter ending on December 31, following a 4.9 per cent dip in the six months to the end of September.

Europe saw a 9.6 per cent decline, driven by challenging economic conditions, increased competition and regulator-imposed price changes, with the UK off by 5.1 per cent and Italy down 16.6 per cent.

Vodafone did much better in markets such as India, where it added 4.9 million mobile users in the quarter alone to take its customer base to 160.4 million, and service revenue grew by 13.2 per cent.

Service revenues were up by 5.5 per cent on an underlying basis in the Africa, Middle East and Asia Pacific region.

But they fell 6 per cent after taking into account the sharp currency movements particularly in the Indian rupee, South African rand, Turkish lira and Australian dollar.

Vodafone said the quarterly figures were in line with expectations and that it remained on target to deliver adjusted operating profit of around £5bn.

Total group service revenues for the period were £9.86bn.

Chief executive Vittorio Colao said: “Our emerging markets businesses are growing strongly, supported by consistent execution and accelerating demand for data.

“In Europe, conditions are still difficult, and we continue to mitigate these challenges through ongoing improvements to our operating model and cost efficiency.”

He said the shift to high-speed 4G services was gaining momentum and there were improving trends in customer numbers.

“We are therefore optimistic that our revenue performance will begin to improve as regulatory headwinds ease and customer appetite for video and content services increases,” Mr Colao added.

Shareholders recently voted to approve a £51bn payout from the £78bn sale of the company’s stake in US mobile phone operator Verizon Wireless, due to complete later this month.

Mr Colao said the deal would leave Vodafone well-positioned and with “the financial and strategic flexibility to make further investments in the business or returns to shareholders in the future”.