Vodafone reported a continued decline in underlying service revenues in its fiscal first quarter to June, as the slowdown in southern Europe started to move to its northern Europe operations as well. Total service revenues for the quarter were up 2.5 percent to GBP 10.155 billion, helped by a strong contribution from Verizon Wireless in the US and positive currency effects. However, on an organic basis, service revenues were down 3.5 percent from a year earlier.
Vodafone showed a 3.0 percent drop in organic service revenues in north Europe and 14.4 percent decline in south Europe. In particular Germany worsened to a drop of 5.1 percent, while the UK improved slightly from the previous quarter but was still down 4.5 percent. Italy meanwhile plunged 17.6 percent lower, and Spain's service revenues were down 10.6 percent on an organic basis. This could not be offset by 5.9 percent growth in Africa, Asia and the Middle East.
Despite the competitive and regulatory pressure in Europe, Vodafone said growth was accelerating in emerging markets and it was making progress on strategic initiatives such as 4G and the expansion in fixed services, through the planned takeover of Kabel Deutschland. Over 5 million customers are now using its new Red plans, which helped drive a 9 percent organic increase in in-bundle revenues in the quarter.
The operator maintained its outlook for the full year, for a small rise in adjusted operating profit and stable capex. In the June quarter, capex increased 6.9 percent from a year earlier to GBP 1.193 billion, and free cash flow rose 2.7 percent to GBP 968 million.
Vodafone finished the quarter with 453.633 million mobile customers, including its proportionate share of joint ventures, up from 448.394 million at the end of March. Growth was led by India, with 2.7 million net additions in the quarter, as well as 2.3 million new customers in Egypt, while Turkey and Greece were the only markets in Europe to add more than 100,000 customers. In the fixed market, the operator added 16,000 new customers in the three months for a total 6.526 million, with growth in Spain, Portugal and Egypt offsetting a decline in Germany.
