Vodafone CEO says European performance starting to stabilise

Vodafone CEO Vittorio Colao said the company's European businesses showed signs of stabilising in the calendar second quarter of 2014--the company's fiscal first quarter--despite the region dragging down total group revenue during the period.

Vodafone CEO Vittorio Colao

Vodafone CEO, Vittorio Colao

Group sales declined 4.4 per cent year-on-year in the April to June period, the majority of which (4.2 per cent) was due to lower service revenues. A 7.9 per cent decline in European service revenues offset 4.7 per cent annual growth in sales from Vodafone's Africa, Middle East and Asia Pacific (AMAP) operations, highlighting the continued importance of emerging markets to the company's growth.

Colao said the year "has started in line with our expectations," and hailed progress in Vodafone's European operations, where "our commercial actions and investment, our performance, is beginning to stabilise quarter-on-quarter," fuelled by high consumer appetite for LTE (4G) services.

The CEO also noted Vodafone's Project Spring investment programme "has taken off quickly, with capex nearly doubling year-on-year, and our 4G coverage in Europe up 20 percentage points to 52 per cent in the last nine months."

Jefferies analysts said Vodafone's top line is beginning "to see some benefits of heavy commercial and network investment." The analysts noted that Vodafone's fiscal first quarter margin investment "was just as heavy as 2H [second half] last year."

Colao said the company is seeing "very strong growth in demand for data in India," and made "further good progress" in a unified communications strategy across several markets.

Vodafone this week completed its acquisition of Spanish cable operator Ono for €7.2 billion--a purchase that boosts its fixed-mobile convergence strategy in the country. Vodafone recently also bolstered its Portuguese operation through a fibre sharing deal with Portugal Telecom covering a total of 900,000 homes. Philipp Humm, Vodafone's CEO of Europe, said the agreement "enables us to bring converged products and services," to the market.

The company's figures prompted a rise in its share price during early trading on Friday, Bloomberg reported. The news agency also said the 4.2 per cent annual drop in service revenue was lower than the average 4.4 per cent analysts forecast--contradicting a report from Reuters that said the figure is inline with analysts' estimates.

For more:
- see Vodafone's earnings statement
- see this Bloomberg article
- read this Reuters report

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