Vodafone's less-than-stellar quarterly results seemed to shock the financial markets, despite prior warnings from analysts flagging that the company was very likely to have had a rocky quarter.
Headline news that Vodafone's operations in Spain and Italy were down (in service revenue terms) by 19.3 per cent and 18.4 per cent, respectively, given their high-profile economic woes, surely shouldn't have been a surprise.
But what ought to have been more of a worry was the company reporting a nearly 10 per cent fall in revenue over the last six months, a £6 billion write-down and its decision to raise its dividend by 7 per cent.
Putting these "local difficulties" to one side, Vodafone would seem to be stumbling in terms of the grand vision outlined for the company by CEO Vittorio Colao two years ago.
The plan Colao unveiled, dubbed "Supermobile," was aimed at boosting mobile data usage, and gaining increased revenues from enterprise users and emerging markets. Alongside this, he wanted a more efficient business with the ability to generate cash from non-core parts of its operations.
Regardless of how you might score the company against these ambitions, the share price is now 4.6 per cent lower against the FTSE 100 than when this splendid plan was first announced. Compare this with the much-maligned BT--that boring ex-state telco--which has risen 45 per cent over the same period.
The danger is that the troubles Vodafone is facing in Spain and Italy by Vodafone drifts northwards to impact the UK and Germany, both of which reported lower quarterly numbers, with Vodafone then relying on parts of its far-flung empire, most notably India and Turkey, to keep the precarious ship afloat.
We then look at Vodafone's 45 per cent holding in Verizon Wireless, that problem-child that generates an $8.5 billion (£5.35 billion) dividend for the parent companies Vodafone and Verizon Communications. And yet Colao has left the door open to leaving the joint venture.
While many of Vodafone's rivals can only in their wildest dreams wish for a "Verizon Wireless problem," the UK-based company does seem to bumble its way forward, albeit in a unspectacular and hazy manner.--Paul