Vodafone Group reported revenues for its fiscal third quarter to December down 3.6 percent from a year earlier to GBP 10.98 billion. On an organic basis, excluding forex effects and acquisitions, revenues were down 4.3 percent, and service revenues fell 4.8 percent to GBP 9.86 billion.
The mobile operator continued to suffer from the weak economic climate and price pressure in Europe, with organic service revenue falling 9.6 percent in the region. This included drops of 5.1 percent in the UK, 7.9 percent in Germany, 14.1 percent in Spain and 16.6 percent in Italy, with germany the only market to show customer growth in the period. Vodafone's emerging markets in Africa and Asia did better, growing revenues 5.5 percent on an organic basis. However, due to negative forex effects, reported revenues there were down 6.1 percent to GBP 3.22 billion.
The company started already on its plans for increased investment, with capital expenditure up 20.7 percent year-on-year to GBP 1.81 billion. Vodafone said it will spend GBP 500 million from its 'Project Spring' investment budget in the current fiscalyear. Free cash flow fell 14.2 percent in fiscal Q3 due to the higher capex, to GBP 1.03 billion.
With the increased investment and growing demand for 4G services, which are now available in 13 of the company's markets, Vodafone said it's confident it can restore revenue growth. The operator said it had 9.8 million customers on its Red plans at the end of December and is on track to reach 11-12 million by the end of March. These plans helped increase in-bundle revenue 6.6 percent in the quarter, taking in-bundle revenue to 59 percent of total service revenues in Europe. Around 2 million red customers in Europe use 4G services, helped driving data traffic in the region 44 percent year-on-year in fiscal Q3.
Among its other growth initiatives, Vodafone said it will launch its mobile payments service in the UK, Italy and the Netherlands by the end of March, taking it to a total five countries. Its Global Enterprise division also reported organic sales growth of 4.5 percent in the quarter, and M2M revenues were up 30 percent. The operator added another 67,000 fixed broadband customers in the three months, mainly in southern Europe, for a total 6.547 million at end-2013. Fixed-line service revenues grew to GBP 1.65 billion from GBP 1.31 billion a year earlier.
The company confirmed its guidance for the full year to March, for adjusted operating profit around GBP 5.0 billion and free cash flow GBP 4.5-5.0 billion. This excludes its 45 percent stake in Verizon Wireless, the sale of which should be completed later this month.
Vodafone ended the quarter with a total 419.40 million mobile customers, an increase of 7.948 million from three months earlier. The growth was mainly due to India and Vodacom in Africa, while Ghana, Egypt, Germany and Romania also posted strong net additions.
