Vodafone's emerging market growth continues despite revenue drop
06 February 2014 | Kavit Majithia
UK group Vodafone has continued its growth across emerging markets and pointed to falling revenues across its more mature European markets for weighing on its overall Q3 financial results, ending in December.
Declines in mature European markets were evident after the company suffered from competition and economic weakness.
Southern Europe was its largest-declining market, with telecoms revenues down by 10% in the region, reaching £6.5 billion following tough conditions in Spain and Italy.
A boom in smartphone adoption and the uptake of voice and data bundles, particularly in emerging markets including India and Turkey, was one of the few positives for the company in its Q3 results. Of the company’s customers, 9.8 million are on “Red” plans for data and voice calls, indicating the shift towards increased data consumption, which has grown by two-thirds year-on-year.
“Our emerging market businesses are growing strongly, supported by consistent execution and accelerating demand for data,” said Vittorio Colao, CEO at the company. “In Europe, conditions are still difficult, and we continue to mitigate these challenges through improvements to our operating model and cost efficiency.”
AT&T was rumoured to be look at launching a full takeover bid for the UK-group, but announced it had receded its interests for the short term last week.
Group services revenue also dropped by 4.8% to £9.9 billion in Q3, while sales in emerging market operations rose by 5.5%, excluding M&A activity and movement in foreign exchange.
Capital expenditure in the period was up by a fifth to £1.8 billion, and relates largely to the company’s commitment to improving mobile and fixed networks under the “Project Spring” initiative. The operator committed to a £7 billion investment on creating better network quality in November last year.
Net debt increased by £5.8 billion to £31.5 billion overall, which was expected by analysts following the completion of a 77% stake acquisition of Kabel Deutschland. It is reportedly looking at acquiring Ono in Spain to complement its growing European cable business.
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