Vodafone reports reduced revenues in Q1 financial results

Vodafone Group has reported decreased revenues in its first quarter financial year results released recently. According to a statement issued by the group, total revenue declined 4.5%, including a 5.3 percentage point negative impact from foreign exchange rate movements according to Group’s financial results for the quarter ending June 30, 2016.

Revenue decreased by 3.2% for the quarter, with foreign exchange movements contributing a 1.9 percentage point negative impact. On an organic basis, service revenue increased by 0.3% (Q4 was 0.5%), despite the impact of regulatory pressures, reflecting growth in all our markets with the exception of the UK, Netherlands and Greece.

(TOP: A Vodafone outlet at Nadi Airport, Fiji. Photo: Wikipedia).

The firm stated that the growth was supported by ‘more-for-more’ value enhancement initiatives in many of its markets and continued commercial momentum in both consumer and fixed. The decline in mobile service revenue moderated in Q1 to -0.8% (Q4 was -1.1%), supported by continued growth in contract base and further signs of ARPU stabilisation across multiple markets. Fixed service revenue trends continue to be robust with growth of 3.3% (Q4 was 5.4%) driven by broadband customer growth.


Commenting on the results Vittorio Colao, Group CEO said: ‘We continued to make good progress during the first quarter. In Europe, our growth remains stable despite regulatory pressure on roaming revenue, with good performance in Germany, Spain and Italy while we are focussed on improving our performance in the UK. Our growth momentum in AMAP (Africa, Middle East & Asia Pacific) remains strong, with excellent performance in South Africa, Turkey and Egypt and ongoing recovery in India. Customers in multiple markets are attracted by our ‘more-for-more’ commercial offerings of larger data bundles and extra services, while we are seeing continued success with our fixed broadband and enterprise strategies.’’

The Group’s total revenue was €13.4 billion (US $17.6 billion) while service revenue was €12.3 billion (US $16.113 billion). Total revenue declined 4.5%, including a 5.3 percentage point negative impact from foreign exchange rate movements. On an organic basis, Group service revenue increased 2.2% (Q4 was 2.5%) and, excluding the impact of mobile termination rate (MTR) cuts, Group service revenue grew 2.4% (Q4 was 3.0%).

However, Vodacom (which refers to Vodafone’s interests in Vodacom Group Limited and ts subsidiaries, including those located outside of South Africa like Kenya’s Safaricom and Vodacom Tanzania) recorded a growth in service revenues grew of 4.4% (compared to 6.3% in Q4), with strong customer and data growth in South Africa offset by a slowdown in international customer growth following new customer registration processes.

Service revenue comprises all revenue related to the provision of ongoing services including, but not limited to, monthly access charges, airtime usage, roaming, incoming and outgoing network usage by non-Vodafone customers and interconnect charges for incoming calls.

South Africa’s service revenue grew by 5.7% (Q4 was 6.5%), supported by customer growth in both prepaid and contract (prepaid net additions 891,000, (Q4 was 728,000).

“Our ‘Just 4 U’ targeted individual pricing strategy continues to support voice revenues. Data revenue growth remains robust at 18.0% (Q4: 18.9%), and data now contributes 38% of South Africa’s service revenues. The growth in data is supported by sustained investment in 3G and 4G network coverage and capacity. Network leadership and customer focus contributed to a record low consumer contract mobile churn rate of 5.3%,” notes the Financial Results statement.

Vodacom’s International operations outside South Africa, which now represent 25% of Vodacom Group service revenue, saw a sharp slowdown in growth to 4.4% (compared to 10.2% in Q4) as customer growth numbers were impacted by stricter compliance on customer registration requirements in Tanzania, the DRC and Mozambique.

The statement however notes that the “customer growth trend is now improving as acquisition procedures become more efficient across all channels. M-Pesa continues to perform well, with over 8.3 million customers (up from 5.6 million a year ago).”


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