Vodafone suffered a slight reduction in its overall European sales in the quarter just ended, seeing a split between northern and southern European operations. In the north, revenues were marginally up or stable, despite MTR cuts and, in the UK, a reduction in customers. In southern European operations came under threat from macroeconomic and competitive pressures, Vodafone said. Vodafone now has 147.4 million customers across Europe (including Turkey), with 61.9% of those prepaid.
The numbers show that service revenues in Europe were down 1.3% year on year, at £7.6 billion – a 0.5 percentage point deterioration compared to the growth rate experienced in the previous quarter. Revenues from the German operation were almost exactly stable while the UK numbers showed a 1.7% rise on last year’s quarter. In Germany the operator added 423,000 customers in the quarter, whilst in the UK it had a net loss of 139,000 customers.
Italy and Spain both saw reductions, of -1.5% in Italy and -9.9% in Spain. In Italy, Vodafone had a net loss of 197,000 customer in the quarter. Although its Spanish division added 123,000 subscribers, Spain has been undergoing fierce price reductions and increased competition. The operator said that macroeconimic conditions in Southern Europe have also been having a negative impact on revenues.
The operator said that excluding the effect of MTR cuts its businesses in northern Europe “continued to grow strongly” with Germany at 4.0% (including MTR cuts: +0.2%) and UK at 5.3%( (including MTR cuts: +1.7%()).
Vittorio Colao, COE said that these were “robust results despite challenging macroeconomic conditions across southern European economies and the impact of cuts to mobile termination rates”.
“Revenue from our key focus areas of data, enterprise and emerging markets continues to grow strongly. With our broad geographical mix and improving market positions, we are well placed for the rest of the financial year,” he said.
Across the group, data revenue for the quarter grew by 24.5% to £1.5 billion, representing 13.7% of Group service revenue. Mobile internet revenues grew 44.2% in Europe, while European messaging revenues grew 6.9%.
The following is Vodafone’s own statement on its country by country operations in Europe:
Germany
Service revenue increased by 0.2%(*) driven by strong data and enterprise revenue growth offset by the impact of MTR cuts. Data revenue grew by 21.4%(*) as a result of the increased penetration of smartphones and Superflat Internet tariffs. Enterprise revenue grew by 4.4%(*) driven by strong fixed line revenue growth of 8.6%(*) and mobile revenue growth of 3.3%(*), as a result of significant customer wins during the quarter and the previous financial year. Total mobile revenue remained stable in the first quarter despite the impact of an MTR cut effective from 1 December 2010.
During the quarter 1.1 million mobile contract customers were migrated to a mobile virtual network operator (‘MVNO’) following revised agreements with wholesale partners, resulting in an overall reduction in reported customers.
The rollout of LTE has continued following the launch of services in the prior financial year and we had 27,000 LTE customers at 30 June 2011.
Italy
Service revenue declined by 1.5%(*), resulting from lower voice revenue which continued to be impacted by price competition and economic weakness. This was an improvement of 1.5 percentage points on the growth rate experienced in the previous quarter. Enterprise revenue performed strongly, driven by a higher customer base and the success of Vodafone One Net, which enables customers to combine their fixed and mobile communications into a single service with one number. An increase in the penetration of smartphones, and those sold with a data bundle, led to strong growth in data revenue of 18.9%(*). Growth in fixed line revenue of 11.3%(*) resulted from strong net customer additions.
Spain
Service revenue declined by 9.9%(*) impacted by continued intense competition, general economic weakness and high unemployment. During the quarter we reduced prices to improve our value perception. The general economic weakness has driven customers to reduce or optimise their spend on tariffs. The move to integrated voice and data tariffs is gaining momentum as smartphone penetration grows. Data revenue grew by 8.9%(*), with strong growth in mobile internet revenue offsetting a decline in mobile broadband revenue.
Customer net additions in the quarter were strong at 123,000, driven by mobile number portability net gains in June. Voice usage increased following the introduction of integrated tariffs.
UK
Service revenue grew by 1.7%(*), with the rate of growth slowing compared to the previous quarter as a result of an MTR cut effective from 1 April 2011. Growth was supported by strong net contract customer additions and the penetration of integrated tariffs into the customer base which more than offset continued competitive pressures. Data revenue grew by 21.9%(*), resulting from the higher penetration of smartphones and data bundles.
In June 2011 we announced a joint venture with Everything Everywhere and Telefonica UK to launch an m-commerce platform, enabling mobile marketing and payment services.
Other Europe
Service revenue increased by 1.1%(*) as growth in Albania, the Netherlands and Turkey more than offset a decline in the rest of the region, particularly in Greece, which continued to be impacted by the challenging economic environment and competitive factors. Service revenue in Turkey grew by 32.1%(*), driven by strong growth in voice and data revenue resulting from a larger contract customer base and higher penetration of smartphones, as well as good growth in enterprise. In the Netherlands service revenue increased by 0.5%(*), which was a decline on the previous quarter due to flattening MVNO revenue, lower messaging revenue growth rates and price competition, partially offset by the penetration of integrated tariffs.