Vodafone unveiled a modest rise in first quarter profits as the phone giant benefited from a strong performance in Italy and Spain.
The FTSE100 group said that group organic service revenue, a key industry measure, rose 2.2 per cent to €10.2 billion (£9.2 billion) during the three months to the end of June. That was a better performance than the 1.4 per cent to 1.9 per cent growth that City analysts had been expecting.
Vodafone said it was seeing strong demand from customers for data packages and broadband with Spain, Germany and Italy all delivering solid performances. Robust demand in Turkey also helped to boost earnings, the group said in a trading statement released this morning, but this was offset by weaker performances from India and the UK.
“Overall this performance gives us confidence in reiterating our outlook for the year,” Vittorio Colao, the chief executive, said. “We have made a good start to the year in Europe, where our commercial momentum remains robust.”
Continuing problems in India, where Vodafone is trying to merge its operations with its rival Idea Cellular to help to fight fierce competition from a new competitor, Reliance Jio, launched by the country’s richest man, triggered a fall in earnings in the Asian country, where Vodafone has more subscribers than anywhere else. Earlier this year Vodafone booked a €3.7 billion writedown in India.
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The group’s service revenue in India fell 13.9 per cent to €1.38 billion during the first quarter, down from €1.5 billion a year ago.
Mr Colao sought to put a positive spin on the India results, which reflected a price war in the world’s second biggest mobile market. “Although competition in India remains intense service revenues stabilised compared with the prior quarter,” he said.
Vodafone said it expected cashflow to rise this year, helping it to raise dividends and complete a merger of its Indian unit with Idea Cellular. The deal should allow it to trim costs and raise profitability as it fights for market share with Reliance Jio.
Vodafone’s performance in the UK was also weak, with service revenue falling 2.7 per cent. The company said it was still benefiting from surging data use, which rose 63 per cent in Europe during the past year.
Group total revenue was down 3.3 per cent at €11.5 billion and group service revenue was €10.3 billion.
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Vodafone’s shares gained just over 5p, or more than 2 per cent, to 230p, in early trading this morning.