Vodafone saw group revenues fall 7.7 percent year-on-year to €13.9 billion during the last quarter.
Revenues from Europe fell 8.2 percent to €9.5 billion, while those from its Africa, Middle East and Asia-Pac business unit were down 3.8 percent to €4.2 billion.
All of the company’s European markets registered a decline, most markedly Italy and Spain, which saw revenues plummet 15.5 percent and 17.8 percent respectively.
The UK performed the most strongly, but revenues there still fell by 1.4 percent.
The number of mobile customers also declined across Europe over the quarter.
“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 CEO Vittorio Colao.
Data revenues grew 7.6 percent, most notably in Europe – up 10.3 percent – but were not sufficient to offset declines in voice, messaging and fixed-line.
Capex was also down as the company said its investment focus was on network quality “in terms of coverage, reliability and speed”.
Added Colao: “We remain focused on driving through significant improvements to our customers’ experience through our ongoing investment in our networks, stores and IT platforms.”
However, Ovum analyst Emeka Obiodu said the “significant point” from the results is that emerging markets are no longer sufficiently rescuing poor performances from Vodafone’s European markets.
“As long as the economic headaches persist in Southern Europe (and with concerns mounting in the UK too), the road ahead will be uncertain for Vodafone and other Europe-centric telcos,” he added.
It can be done – rival TeliaSonera last week demonstrated how its emerging market portfolio is paying off.
Vodafone preempted its troubles to some extent by reorganizing its corporate structure.
“Our new regional structure will underpin our strategy focused on meeting our customers’ long-term needs,” Colao said at the time.
But while fencing off the poorly performing region might make the balance sheet look more presentable, it is unlikely to radically alter performance.
In common with its rivals, Vodafone repeated the common refrain that increased competition, regulation and the challenging European economy for were hindering its current results.
“Unfortunately, these dynamics are not going to change soon and the industry will have to work a lot harder to stabilize its performance while unlocking additional value in their business,” said Obiodu.
To be fair to Vodafone, it is putting building blocks in place.
In February, for example, it announced an m-payments partnership with Visa and claimed Volkswagen as a client of its enterprise services division in an exclusive four-year deal last week.
The problem is that, again, such initiatives will not radically alter the bottom line in the next 12-24 months.
The takeover of Cable and Wireless Worldwide, which is expected to formally close in the next couple of weeks, could be a gamechanger.
But in the meantime it is thankful for its strategic investment in US telco Verizon, in which it holds a 45 percent stake.
“Ironically, the main shining star in the results is Verizon,” said Obiodu.
“Had Vodafone’s management capitulated to shareholder pressure few years ago to sell the stake, Vodafone’s results would have even being more worrying.”
Service revenues from Verizon grew 8.2 percent over the quarter.
It looks as though Vodafone will have to rely on Verizon’s continuing good performance to help its balance sheet for a while yet.
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