Vodafone has reported declining revenue for a second consecutive quarter as customers in Europe reduced spending amid slowing economies.
Service sales fell 2.6 percent in the third quarter ended December 31, excluding the impact of acquisitions and currency fluctuations, the company said today in a statement.
Vodafone is eliminating jobs in Europe, including as many as 1,000 in Spain, to lower costs as consumers and companies cut spending amid soaring unemployment and contracting economies.
Service revenue plunged 14 per cent in Italy, 11 per cent in Spain and 5.2 per cent in the UK, while rising in markets such as India and Turkey.
"These results are modest to weak," said Andrea Devita, an analyst at Banca Akros in Milan who recommends holding Vodafone shares.
"But this earnings season has been horrible, so investors have had time to adjust their expectations."
Vodafone, whose revenue trails China Mobile, rose 2.1 per cent to 174 pence at 8:29 am in London. The shares had declined 2.6 per cent in the past 12 months.
"You have the economy, competition, you have regulation," Ms Devita said. "You can see it with all the operators reporting these days."
Chief executive officer Vittorio Colao is increasingly relying on operations outside of Vodafone's home market. Service revenue at Verizon Wireless, Vodafone's US joint venture with Verizon Communications, rose 8.7 per cent last quarter.
Vodacom, Vodafone's African business, boosted total sales 1.7 per cent last quarter. To persuade people to spend more in saturated markets, Vodafone and competitors are investing in so-called fourth- generation networks allowing faster data speeds for customers browsing the Web and watching video.
"We continue to face difficult market conditions in Europe and we expect those to continue in the coming year," Mr Colao said today on a conference call with reporters.
"My answer on where is the money for investment going clearly indicates we do believe in high speed."
Meanwhile, Vodafone Ireland has retained its position as Ireland's largest telecommunications provider with a total customer base of 2.45 million at the quarter ended 31 December 2012. Vodafone Ireland's contract base stood at 778,900, representing growth of 18,300 on the previous quarter.
Bloomberg
