Vodafone hit by 'triple whammy' across its European businesses

By Peter Campbell

PUBLISHED: 15:56 EST, 19 July 2013 | UPDATED: 15:56 EST, 19 July 2013

Vodafone was hit by a 'triple whammy' across its European businesses in the last three months.

The mobile phone firm's revenues fell 3.5 per cent after stiff competition, stringent regulation and moribund economies across the eurozone hammered its performance on the Continent.

In Southern Europe its revenues fell 14.4 per cent, with business down 17.6 per cent in Italy and 10.6 per cent in Spain.

Last year Vodafone wrote £7.7bn off the operations in those countries, and will look again at its valuations in November.

Even Germany, its biggest European market where the company is looking to splash £6.6bn on the BT-esque firm Kabel Deutschland, saw revenues drop 5.1 per cent.

The company (2.55p higher at 193.5p) was forced to slash prices after rivals cut rates, which pushed down its takings.

'For sure I'm not pleased,' said chief executive Vittorio Colao. 'But I'm not worried, it's just a normal phase of competitiveness.'

The group expects its deal to buy Kabel Deutschland, which has 8.5m customers and will enable Vodafone to offer expanded services in the country, to complete by the end of the financial year.

At once stage rival Liberty Global bid for Kabel, but since backed down. Revenues for the group, including those from its joint ventures, fell to £10.1bn.

The amount of data - such as mobile internet or emails - increased by 60 per cent and its Vodafone Red offering now has more than 15.2m customers globally.

In the last three months it launched superfast 4G services in Spain, Australia and the Czech Republic, meaning it now offers the high speed internet in ten countries - but not Britain.

Colao also said the group would launch 4G in the UK 'by the end of the summer,' which he then defined as 'by the 21st of September'.

In the UK revenues fell 4.5 per cent, of which 2 per cent was due to price cuts.

He admitted that rival EE already offering its own version of 4G had impacted customer numbers 'a little bit, but not much'.

But he added Vodafone's 4G would be faster because of the frequency on which it will be broadcast, and many customers were prepared to wait six months to get a 'better service'.

Richard Hunter, head of equities at Hargreaves Lansdowne, said: 'Europe in general remains an area of weakness through a triple whammy of increased pricing pressure, regulation and an uncertain economic outlook.

'But emerging markets provide a bright spot, with revenues in Turkey, up 15 per cent, and India, up 14 per cent, especially worthy of note.'

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