By Louis Goss
Shares in Vodafone today fell almost two per cent after the telecoms firm said its European revenues dropped over the previous year as price pressures have hit its business.
Analysts warned the slide in Vodafone’s revenues comes as company chief executive Margherita Della Valle’s first test as head of the telecoms company after she took up the top job last year.
Vodafone’s sliding revenues came as the continental European telecoms market faces a period of uncertainty that his hit the value of some of the world’s top mobile phone firms.
Vodafone however said lower revenues from its German, Italian, and Spanish businesses were partially offset by growth in its UK and other European operations.
The phone operator also posted strong growth outside of Europe as it gained from inflation in Turkey and the continued growth of its financial services business in Africa.
In a trading update, Vodafone said its overall revenues marginally fell from €11.684bn (£10,319bn) in the third quarter of the financial year 2022 to €11.683bn in Q3 FY2023.
The overall service revenues Vodafone generates from providing phone network coverage to customers dropped 1.3 per cent, from €9.647bn in Q3 2022 to €9.52bn in Q3 2023.
Vodaphone said its German revenues – which account for around a quarter of its overall service revenues – dropped 1.8 per cent, due to a drop in customers related to new legislation surrounding the country’s Telecommunications Act (TKG).
Germany’s Telecommunications Act gives customers more rights to switch or cancel their contracts in the case of poor service.
In Italy, Vodaphone’s services revenues fell by 3.3 per cent as a result of price pressure in the “value” segment of the market.
Michael Hewson Chief Market Analyst at CMC Markets said Vodafone’s poor performance in Italy raises the question as to “why management thought it a good idea to reject last year’s €11bn offer by Iliad for its Italian business”.
Similar prices pressures in Spain saw Vodaphone’s service revenues drop 8.7 per cent as customers switched to better value deals.
Vodafone chief executive Della Valle said: “Although we’re continuing to target our financial guidance for the year, the recent decline in revenue in Europe shows we can do better.”
Those declines in Spain, Germany, and Italy were however partially offset by a 5.3 per cent uptick in revenues in Vodafone’s UK business, as the firm profited on building its customer base and hiking prices.
In all of its other European businesses apart from Romania the firm also boosted its revenues by expanding its customer numbers.
In Turkey, the firm’s revenues surged by 34.1 per cent as the firm capitalised on high inflation by capturing a larger share of the market.
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