Vodafone UK service revenues up 1.7 per cent

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Results show service revenues have grown by 1.7 per cent year-on-year as CEO says group is “on track” for the rest of the year

Vodafone has grown its service revenues in the UK for its first quarter to June 30 by 1.7 per cent to £1.215 billion compared with a 0.7 per cent rise in the same quarter last year and 5.5 in the previous quarter.

The Vodafone Group meanwhile saw service revenues increase 1.5 per cent to £10.9 billion as CEO Vittorio Colao said the operator is on track for the rest of the year.

Vodafone says if you split out the impact of Mobile Termination Rates (MTRs) which were reduced in April, its service revenues in the UK were up 5.3 per cent in the quarter, compared with a rise of 5.8 per cent in the previous quarter and 3.7 per cent in the first quarter of last year.

MTRs have been reduced in several countries globally. Stripping out the effects of MTRs cuts in all of Vodafone’s markets the group’s service revenues for the quarter would have been up 3.9 per cent.

UK growth was supported by strong net contract customer additions and the penetration of integrated tariffs into the customer base, according to the operator. This, it said “more than offset” continued competitive pressures.

Vodafone UK lost a total of 345,000 prepay customers in the quarter, but added 206,000 new contract cutomers meaning its total loss stood at 139,000. Less than half – 48 per cent- of its customer base are now prepay subscribers.

Prepay churn sat at 64.5 per cent for the quarter, while contract churn was 16.3 per cent. Total churn reached 39.8 per cent.

Data growth in the UK rose by 21.9 per cent year-on-year which is attributed to the higher penetration of smartphones and data bundles, Vodafone said.

The operator said 82 per cent of customers purchasing a handset from it now buy a data bundle as well.

Data growth was also a major factor in the growth of Vodafone’s Enterprise business. This grew by 1.7 per cent across the group with Europe rising by 0.7 per cent.

Within this segment of the business, data revenue increased to account for 21.2 per cent of enterprise revenue – which was again attributed to high smartphone penetration.

The growth in data continued across Vodafone’s portfolio. Group data revenues grew by 24.5 per cent to £1.5 billion with European smartphone penetration contributing strongly. This rose by 19.5 per cent compared to 13.6 per cent in Q1.

Despite this penetration, some European markets did not perform well. Service revenue in Italy fell by 1.5 per cent and in Spain they plummeted by 9.9 per cent. Germany only rose by 0.2 per cent.

The drops were blamed on “price reductions” in these markets, by Vodafone.

Elsewhere there was a strong performance from Vodafone’s operations in emerging markets. Service revenue growth in India rose by 16.8 per cent, in Turkey by 32.1 per cent, South Africa by 7.8 per cent.

Speaking about the results Vodafone chief executive Vittorio Colao (pictured) said the company had made a good start to its financial year.

“We have made a good start to our financial year, reporting robust results despite challenging macroeconomic conditions across southern European economies and the impact of cuts to mobile termination rates,” he said.

“Revenue from our key focus areas of data, enterprise and emerging markets continues to grow strongly.

“With our broad geographical mix and improving market positions, we are well place for the rest of the financial year.”

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