Vodafone disappoints as latest results show room for improvement

Vodafone suffered a bad end to 2011 as it registered falls from Barcelona to Sydney in the last quarter.

Group revenues declined 2.3 percent year-on-year to €13.9 billion between October and December.

Falls were felt across the company’s business – Europe suffered a 3.1 percent y-o-y drop while revenues in Africa, the Middle East and Asia Pacific (AMAP) fell 1.5 percent.

The company was particularly badly hit in Italy and Spain – two countries suffering badly from the economic downturn – where revenues fell 5.4 percent and 9.3 percent respectively. Vodafone said market conditions remained difficult.

The news was better elsewhere in Europe, particularly Turkey where Vodafone is growing its customer base. In more established markets of Germany and the UK, the company said growth, which was below one percent in both countries, was thanks to increased data revenues.

“We are continuing to make progress in the key strategic areas of data, enterprise and emerging markets,” said CEO Vittorio Colao.

However, despite growth in some regions – particularly India where revenues were up 6.3 percent – AMAP was also hampered by poor performance. The company said “network and customer service difficulties” were to blame in Australia, for example, while lower inbound roaming revenue was the cause of falling revenues in Egypt.

Nevertheless, the CEO said he remained happy with the company’s broad geographic mix: “It is delivering a resilient overall performance,” he commented.

Data revenue grew by 18.1 percent overall, led by increasing smartphone penetration, and now represents 14.8 percent of total service revenue. Sales from other segments, such as messaging, were also up.

Fixed revenue increased by 3.9 percent and now represents 8.5 percent of total service revenue. Vodafone now has 8.8 million fixed line customers of which 6.4 million have a fixed broadband subscription.

However, this growth was not sufficient to offset a 9.3 percent drop in voice revenues, which makes up roughly 60 percent of revenue overall.

Yet again, these figures from Vodafone show that having a broad geographic mix and growing data revenues do not always translate into increased revenues.

While the effects of consumers in Italy and Spain reining in spending – to name just two European countries suffering from a macroeconomic downturn – are beyond the control of a telco, other factors are not.

It is particularly galling, for example, that Vodafone has had to admit that network and customer service difficulties were to blame in Australia. Such basic mistakes are the kind that Europe’s third-largest telco can ill afford to make.

Investors took a sanguine view as the company’s share price held up, no doubt buoyed bya cash pile that has been boosted by a favourable result in its Indian tax dispute and a €3.3 billion dividend from Verizon Wireless.

News that its merger with Greek mobile operator Wind Hellas has been terminated could also prove to be a blessing in disguise.

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