Vodafone hit by weak European conditions
UK-based operator Vodafone has been hit by tougher competition in Germany and weak economic conditions in southern Europe to cause a fourth quarterly decline in a key sales measure.
The company today has posted a fall of 3.5% year on year in underlying service revenue for three months up to the end of June, and the results was largely in line with projections of a 3.6% decline from analysts.
“The current market conditions overall across the group will be similar in the coming quarter,” said Anthony Halford, CFO at Vodafone.
Underlying service revenue in Germany was particularly low, with the company suffering a 5.1% decline. Vittorio Colao, Vodafone’s chief executive said the poor performance in Germany was largely due to increased pressure from rivals in the market, including Deutsche Telekom.
“There’s more competition in Germany, which we have responded to… we have to face a more intense pricing environment,” he said.
Vodafone is increasing its presence in Germany and struck a deal to acquire Kabel Deutschland just last month.
The company has however also suffered in Italy, with service revenue down by 17.6% year on year, with the dip also felt in Spain by 10.6%.
Colao did comment on the company’s improved performance in emerging markets, with sales growth in Turkey up by 15.5% and in India by 13.8%.
It gave no update on the future of its involvement in US operator Verizon Wireless, of which it owns a 45% stake.