Vodafone sales tick down on new reporting rules

Mobile network operator (MNO) Vodafone has reported a 4.9% slide in total revenues for its first fiscal quarter to €10.91bn (£9.70bn) after the introduction of the new International Financial Reporting Standard (IFRS) 15 in April, designed to bring new levels of clarity to how revenues are reported. Under the preceding regulations, the decline was less steep, down 2.1% to €11.23bn.

“The Group’s organic service revenue growth slowed during the first quarter, in line with expectations. The majority of our operations performed well, with ongoing momentum in Germany, further underlying recovery in the UK and continued good growth in AMAP, all of which helped to offset increased competition in Italy and Spain,” said outgoing CEO Vittorio Colao.

“Our commercial performance was solid, with further broadband market share gains in Europe, a record number of customers adopting our converged propositions and the continued success of our world-leading IoT platform.

“In India, where competition remains intense, we have now received conditional approval from the Department of Telecoms for the merger of Vodafone India and Idea Cellular, which we aim to close before the end of August, allowing us to unlock substantial synergies.

The Group’s overall performance (including good progress in reducing absolute operating costs for the third year running) provides us with the confidence to reiterate our outlook for the year.”

In the UK, services revenues also dropped 4.9%, compared to 3.4% in the previous quarter, hit by a drag on handset financing which weighed on organic service revenue, without which things would actually have improved, with solid growth in consumer mobile and fixed line products, while a note of stability crept into its enterprise business, reflecting operational changes taken over the past 12 months.

Mobile services revenues dropped 7.9% (5.7% in the previous quarter) but grew 0.8% excluding handset financing and regulation, with underlying growth helped along by price increases back in April 2018, linked to the Retail Price Index (RPI). Vodafone said it added 77,000 contract customers, compared to just 6,000 in the prior period, supported by declining churn rate.

Fixed services revenues were a highlight for the UK business, up 5.3% (3.6% in the previous quarter) as its consumer broadband business generated widespread public interest – in particular off the back of its full-fibre broadband venture with CityFibre, which has just started to connect customers in Milton Keynes.

Vodafone added 52,000 new broadband customers during Q1, meaning it now serves 435,000 homes in the UK. .... .... .... ..... .... ..