Vodafone has blamed worsening economic conditions in Southern Europe for a drop in revenues.

The operator revelaed overall Q4 revenues fell two percent to €13.3 billion with service revenues dropping 2.2 per cent to €12.1 billion.

Southern Europe, mainly Italy and Spain, proved the biggest drag with revenues there down 17 per cent to €2.7 billion and service revenues down 11.9 per cent.

Vodafone, led by chief executive Vittorio Colao, said “intensified” economic woes, regulations and competitive pressures across Europe had caused the decline.

It also blamed its decision to remove handset subsidies in Spain for a period last year for the drop.

Northern and Central Europe also suffered with service revenues down 0.9 per cent. Germany recorded a 0.2 per cent dip caused by lower customer additions while the UK fell 5.2 per cent with lower out of bundle usage being blamed.

However, Turkish service revenues shot up 18.4 percent driven by strong growth in data and enterprise and more contract customers.

Elsewhere, the AMAP region grew 2.7 per cent as India, now with 2.5 million 3G subscribers, boasted revenue growth of nine percent.

Group data revenues over the period rose 12.8 per cent to €2 billion with 33.4 per cent of its European customers now using smartphones, up from 24.4 per cent in December 2011.

Enterprise revenues dropped 2.5 percent as they were again hit by woes in Southern Europe.

“Our results continue to reflect very difficult market conditions in Europe. We are addressing this through firm actions on cost efficiency, and continuing to invest in areas of growth potential,” said Colao.  

“We continue to make progress in our Vodafone 2015 strategy, with good revenue growth in data and emerging markets, the launch of LTE services in another four markets and the acquisition of new spectrum.

“Vodafone Red, our new strategic pricing approach in Europe, has been launched in five markets with positive early take-up.” 

Ovum analyst Emeka Obiodu said the results were to be expected given the European economic crisis.

“Telecoms is a lagging indicator to the economy. Accordingly given Europe’s economic woes we expect telcos that rely on Europe for the majority of their revenues to struggle. The challenge for Vodafone and other European operators is to stabilise their performance and ensure that their share of the customer’s wallet holds firm.

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