Vodafone on Friday reported organic service revenue growth for the second consecutive quarter thanks to another strong performance at its emerging market operations and the slow but steady improvement in Europe.
The U.K.-based telco group generated service revenues of £9.2 billion during its fiscal first quarter, up 0.8% on an organic basis compared to last year. In the previous quarte r – fiscal Q4 – service revenues grew by 0.1% on-year.
Growth was driven by Vodafone’s Africa, Middle East and Asia Pacific (AMAP) business, which grew service revenue by 6.1%, offsetting a 1.5% contraction at its European operations.
"We have made a good start to the year. Our emerging markets have again maintained their strong momentum and more of our European businesses are returning to growth, as customer demand for 4G and data takes off," said Vodafone CEO Vittorio Colao, in a statement.
Vodafone attributed the improved performance to stabilising ARPUs due to a higher proportion of contract customers, and increasing data use driven by strong 4G uptake. The operator ended June with 18.9 million 4G customers in Europe, accounting for vast majority of Vodafone’s total 4G customer base of 24.1 million.
The U.K. returned to organic service revenue growth, generating $1.4 billion, up 0.2% on last year.
In June, Vodafone UK returned to consumer fixed broadband market with the launch of Vodafone Connect. Available in select areas at launch, the company plans to roll it out nationwide during the summer, followed by a TV service before the end of Vodafone’s current financial year.
The growth in the U.K. was offset by continued, albeit slower, declines in Germany, Italy and Spain (see chart).
Nonetheless, Europe is showing encouraging signs, and Colao is doubtless hoping Vodafone’s soon-to-be reorganised management structure will build on this promising momentum.
Earlier this week, the company announced that the CEOs of Vodafone’s major European operations w ill join the executive committee and report directly to Colao. The changes are due to take effect in October, and will also see the departure of Philipp Humm, CEO of Vodafone Europe.
Meanwhile the standout market in Vodafone’s AMAP business was once again India, where service revenues grew to £1.1 billion from £1.0 billion a year ago. In local currency terms the growth rate was 6.9%.
This was attributed to a 65% growth in mobile data revenue driven by the addition of 3.1 million data customers, taking the total to 66.8 million. This offset continued declines in voice revenue, reflected by increased competition.
