Vodafone looks to India as Q2 service revenue falls 4.2% to $15.75 billion

Vodafone Group Plc, the second-largest mobile-phone company in the world after China Mobile, reported a 4.2 per cent decline in group service revenue to £9.4 billion (about $15.75), on the back of a 7.9-per cent decline in revenues in Europe, which was moderated by a 4.7 per cent revenue gain in Asia, Middle East and Asia Pacific regions.

Excluding the impact of mobile termination rate (MTR) cuts, group service revenue fell by 2.9 per cent, Vodafone stated in a release.

Consolidated group revenue was £10.2 billion, down 4.4 per cent from a year earlier excluding acquisitions and exchange-rate changes.

Vodafone said there was evidence of commercial improvement in Germany, although revenues still showed a negative growth of -4.9 per cent. In Italy, revenues fell 16.1 per cent while in the UK revenues were down 3.2 and in Spain down 15.3 per cent on renewed competition

India and Turkey were exceptions, recording revenue growth of 10.3 per cent and 3.7 per cent, respectively.

Vodafone, however, said its performance is beginning to stabilise quarter-on-quarter in several European markets.

The company said trading in the first quarter was consistent with management's expectation, and confirmed its outlook for financial year 2015.

The company expects free cash outflow on a guidance basis of £0.6 billion reflecting Project Spring investment and a net debt of £14.1 billion (£11.0 billion including Verizon loan notes), before Ono consideration of £5.7 billion

"The year has started in line with our expectations. Through our commercial actions and investment, our performance is beginning to stabilise quarter-on-quarter in several of our European markets, with customer appetite for 4G services clearly growing. We also see very strong growth in demand for data in India. In unified communications, we have made further good progress on our strategy, continuing to implement our plans in several markets, and our customer growth trends demonstrate the strength of our commercial execution," Vittorio Colao, chief executive, commented.

"Our £19 billion Project Spring investment programmme has taken off quickly, with capex nearly doubling year-on-year, and our 4G coverage in Europe up 20 percentage points to 52 per cent in the last nine months. We are increasingly well positioned to deliver high speed mobile and fixed data services to consumers annd businesses alike," he added

Vodafone is increasingly relying on emerging markets, where more customers are adopting mobile phones and wireless web access for the first time, to combat sluggish performance in more saturated European markets.

The company plans to spend £19 billion ($32 billion) on a network-improvement plan through March 2016, shoring up services in Europe and building out its network in high-growth markets.

Still, Vodafone said that several markets are showing signs of improvement. There is ''evidence of commercial improvement'' in Germany, Italy and the UK, even as all three countries reported revenue declines, the company said.

''Our performance is beginning to stabilize quarter-on-quarter in several of our European markets, with customer appetite for 4G services clearly growing,'' Colao said.

Vodafone rose 2.1 per cent to 202 pence at 8:27 a.m. in London. The stock had lost 33 per cent so far this year before the day's climb.