Vodafone hit by eurozone crisis, revenue falls by 7.7%

Written on:July 20, 2012
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Vodafone gets entangled in eurozone crisis, posts low revenues

British telecom giant Vodafone has reported that its underlying service revenues fell by 1.6% in Europe to £6.9 billion in the three months to 30 June, with countries such as Italy, Spain, Greece and Portugal contributing to the decline owing to the ongoing eurozone crisis.

Vodafone revealed that revenues fell 17.8% in Spain, 15.5% in Italy, 4.6% in Germany and 1.6% in the UK. Sales in Europe as a whole fell 8.2%. The company’s group revenues fell by 7.7% to £10.76 billion in the three months to June 30, while its revenues in Africa, Middle East and Asia Pacific dropped 3.8%, with a 1% fall in India.

The group blamed “intense competition and customers reducing or optimising their spend on tariffs due to the weak macroeconomic environment” for the drop in performance. Fixed telecom revenues grew by 3.4%, with the number of broadband customers rising to 6.3 million.

Vodafone is hopeful that the smartphone boom, led by products such as Apple’s iPhone and the Samsung Galaxy, can reverse its fortunes. Data revenues (text messaging) grew 17.1% to £1.6 billion, accounting for 16% of service revenues.

The telecom giant added that an eight percentage point rise in European smartphone penetration to 28.7% is driving 47.2% growth in the region’s mobile internet revenues. “Inevitably we are now about to embark on a new wave of cost initiatives, it is what you have to do when times are tough,” Vittorio Colao, chief executive said.

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