Vodafone revenue dragged lower by Spain and South Africa

Fri Jul 25, 2014 9:23am EDT
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By Paul Sandle

LONDON (Reuters) - Vodafone reported another big quarterly drop in its main revenue measure, as weakness in South Africa and Spain offset stabilization elsewhere in Europe, and said a broader improvement is not expected until later in the year.

The world's second-biggest mobile operator is ramping up spending on new, faster 4G networks to satisfy customers' growing appetite for data.

But that comes against the backdrop of cut-throat competition as operators battle weak demand in some struggling European economies. Regulatory changes, such as cutting the charges operators can impose to connect calls across networks, have also been a drag.

Vodafone said on Friday the pace of decline in organic service revenue, which strips out items such as handset sales and currency movements, accelerated to 4.2 percent in the three months to June 30, the company's financial first quarter.

That was in line with analysts' forecasts and compared with a rate of 4.0 percent, including a full contribution from Italy, in the last quarter of its previous financial year.

Chief Executive Vittorio Colao said the group was doing better in some European markets, such as Germany and Britain.

"It is encouraging that quarter-on-quarter some markets seem to be stabilizing but I think it is early to call any low point," he told reporters on Friday. The company is hoping for a broader improvement in the second half of its financial year.

Shares in Vodafone, which have fallen 9 percent in the last three months, underperforming the European telecoms index by 11 percent, were trading up 1.5 percent at 201 pence 1045 GMT.   Continued...

A pedestrian passes a Vodafone store on Oxford Street in central London, November 10, 2009. REUTERS/Kevin Coombs