Telco posts organic service revenue growth in three months to end of June thanks to AMAP, excluding India.

Vodafone posted a solid set of financial results for its fiscal first quarter, increasing service revenue in most of its key European markets and beyond, but a closer look at the numbers shows it is up against a new wave of competition in certain areas.

The telco reported a 3.3% decline in group revenue to €11.47 billion in the three months to the end of June, with a slip in Europe cancelling out growth at its Africa, Middle East and Asia-Pacific (AMAP) business. However, organic service revenue grew by 2.2% to €10.28 billion, again buoyed by AMAP.

"We have made a good start to the year in Europe, where our commercial momentum remains robust, and growth accelerated across AMAP," Vodafone chief executive Vittorio Colao said, in the operator’s results announcement.

"Although competition in India remains intense, service revenues stabilised compared with the prior quarter," he added.

Vodafone India is now classified as discontinued operations, and the group’s numbers have been restated accordingly, following its decision to merge with Idea Cellular. The plan was announced earlier this year and the deal is expected to close in calendar 2018.

Service revenue at Vodafone India fell by 13.9% organically in Q1 to €1.39 billion "as a result of continued price competition from the new entrant and incumbents," Vodafone said.

According to regulatory data, new entrant Reliance Jio Infocomm became India’s fourth largest mobile operator in March.

Vodafone’s AMAP business, excluding India, saw organic service revenue growth of 7.9% in Q1, driven by a solid performance from Vodacom, particularly in its home market of South Africa. The telco also reported strong growth in Turkey and Egypt.

In Europe, where Vodafone generates three-quarters of its top line, service revenue grew by 0.8% organically to €7.62 billion, with three of its four major markets turning in growth. The exception was the U.K., where declines in both fixed and mobile revenue were smaller than in the previous quarter.

The strongest growth in the big four came from Italy, where competition is due to ramp up with the arrival of French disruptor Illiad late this year or early next. Vodafone increased service revenue in Italy by 3.2% in Q1, driven by growth in the fixed market. Its mobile service revenue was up by 0.9%, despite an already increasingly competitive prepaid environment and rising churn.

"Overall, this performance gives us confidence in reiterating our outlook for the year,"Colao said.