Europe: Vodafone finds silver lining in region's Q1 losses

The U.K.-based Vodafone Group released its interim management report on July 25, showing that its service revenue declined 4.2% in the quarter ending June 30, the first quarter of the company’s fiscal year. While Europe continued to drag down that figure ― the region declined 7.9% this quarter compared to falling 9.1% the previous fiscal year ― Vodafone sees evidence of improvement.
“The year has started in line with our expectations,” said CEO Vittorio Colao. “Through our commercial actions and investment, our performance is beginning to stabilize quarter-on-quarter in several of our European markets, with customer appetite for 4G services clearly growing.”
In other parts of the world, Vodafone fared better: revenue from Africa, the Middle East and the Asia-Pacific region were up 4.7%. However, Europe is Vodafone’s largest market and the improvements there are still in terms of lessened losses. In Germany, service revenue was down 4.9%; in the U.K. it declined 3.2%. Italy and Spain decreased 16.1% and 15.3% respectively.
Vodafone is in the midst of its “Project Spring” a $32 billion investment program, and the telecom operator touted its progress in expanding its LTE coverage across Europe, reaching 6.7 million total customers at the end of the quarter. Vodafone reported that data traffic was up 73% year-on-year.
“Our … Project Spring investment program has taken off quickly, with [capital expenditures nearly doubling year-on-year, and our 4G coverage in Europe up 20 percentage points to 52% in the last nine months,” Colao said.
Indeed, Vodafone has been busy spending. It signed major vendors Huawei, Ericsson and Nokia Networks to help with the Project Spring network upgrade. Recently, it added Alcatel-Lucent to the list to supply small cells for the project. Vodafone also has been making acquisitions, recently closing a deal to buy Spanish cable provider Ono for about $10 billion, although the acquisition has caused Vodafone to scale back plans to build a fiber network in Spain in partnership with the French telecom Orange.
Vodafone Group’s total revenue for the quarter came in at $17.3 billion down 4.4%. Service revenue made up the lion’s share of that amount at $16 billion. The full report can be viewed here (PDF).
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More news from Europe:
The European Commission issued a report on the state of Europe’s telecom industry. In the study, the commission found that industry revenues declined in 2013, even as investment began to grow. Mobile voice and data prices are still higher in Europe than in the U.S., but Americans use mobile services more often resulting in a higher average revenue per user. There is also still a disparity among EU countries in terms of infrastructure and service. For instance, only Denmark, Germany, Latvia and Malta met the 2012 target for authorizing specific spectrum bands for LTE services. Another 21 countries followed the next year, but the delay has slowed the roll-out of LTE across the EU.
“We are clearly still a long way from a real single market,” said Natalie Kroes, VP of the commission. “We need to cut red tape and we need more consistent regulatory action at both national and EU levels to build up that single market.” The full report can be accessed here.
Telefónica taps Nokia Networks to help upgrade its LTE network in Spain. The Madrid-based telecom has selected Nokia Networks to be a key supplier of radio access equipment and services in four areas of Spain over a period of three years.
KPN appoints former Dutch finance minister as CFO. The board of the Dutch telecom announced it would appoint Jan Kees de Jager as its new CFO starting August 15. Jager served as Holland’s minister of finance from 2010 to 2012, and prior to that he was the state secretary of finance. Steven van Schilfgaarde has been acting as KPN’s interim CFO since September 2013.
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