Customer numbers at Vodafone Ireland's mobile business rose 3.2 per cent year on year and smartphone use soared in the first quarter of the year.
The mobile network said about 54 per cent of contract devices sold since December 2010 were smartphones. However, text messages remain the preferred method of communication, with Vodafone customers sending 221 messages per customer, compared with 108 across Europe. This was 10.8 per cent higher year on year.
Changing consumer spending patterns saw service revenue fall 6.2 per cent to €245 million at the end of the quarter, while average blended monthly revenue per user was down 10.5 per cent to €32.30.
Meanwhile, minutes of use per customer rose by 1.8 per cent to 262 minutes. This is also above the European average, which currently stands at about 168 minutes, Vodafone said.
Mobile broadband customers rose 30 per cent year on year, gaining 40,000 net customers.
The company had a total of 2.4 million customers as of the end of March, including its fixed line and DSL business.
On a group basis, profit at the Vodafone Group fell 0.4 per cent as sales in some southern European markets declined.
Earnings before interest, taxes, depreciation and amortisation fell to £14.7 billion. Analysts had predicted Ebitda of £14.6 billion, according to a Bloomberg survey. Sales rose 3.2 per cent to £45.9 billion.
Faced with unemployment at more than 20 per cent and the deepest budget cuts in three decades, Vodafone's Spanish unit has struggled to attract customers to higher-priced smartphones. In Italy, the operator is battling increased price competition from Telecom Italia. Italy and Spain are the second- and third-biggest markets for the company after Germany.
Fourth-quarter service revenue growth was unchanged at 2.5 per cent in the three months through March compared with the prior period. Analysts had estimated 2.1 per cent. Service sales include revenue from voice, data, messaging and broadband offerings and exclude handsets and accessories.
"Markets remain competitive and the economic environment, particularly across southern Europe, is challenging," Vodafone chief executive Vittorio Colao said. "Customers have adopted data services in increasing numbers, as smartphones proliferate and the tablet market begins to take off."
Operators are currently working out strategies to offer data packages that generate the highest returns. Royal KPN NV last month lowered its full-year profit forecast and Investec Securities analyst Morten Singleton said the largest Dutch phone company had been "mispricing" its service packages as subscribers move away from voice and text message services toward data offerings.
Under Mr Colao, annual sales from mobile data have climbed to about £5 billion since he took control of the company in 2008. Vodafone's cost of sales climbed 34 per cent between 2008 and 2010, according to Bloomberg data, as handset subsidies and license and mobile frequency costs soared.
The British operator has said it plans to increase the percentage of sales from smartphones in Europe to about 70 per cent in the fiscal year ending March 2013 from 30 per cent last year. The company is switching to tiered pricing plans based on the amount of data used and quality of service.
Additional reporting: Bloomberg
