Vodafone exceeds expectations with strong UK growth

 
Sarah Spickernell
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Analysts had predicted a 0.7 per cent fall in revenue (Source: Getty)

Vodafone is doing better than analysts had expected, both in the UK and beyond.

The figures

During the three months to 31 December, group service revenue for the UK telecoms company was £9,789m.
Once merger and acquisition activity and foreign exchange rates had been accounted for, this was a 0.4 per cent decline compared to 2013, but the figure still beat analyst expectations of a 0.7 per cent fall.
The company said its better-than-expected results were because of strong UK growth and a steady recovery in the rest of Europe. It also highlighted accelerated growth in India as a contributing factor.

Why it's interesting

While Vodafone is doing better than expected, investors are waiting to see how the company approaches the rising popularity of bundled packages, which incorporate telecoms and internet services.
This “multi-play” market is more established in other European countries than in the UK at present, but Vodafone is expected to take steps towards expanding into the UK's consumer broadband market soon.
This morning's announcement that BT purchased EE, the UK's largest mobile network, for £12.5bn is a sign that competition in the market is heating up.
Sky also voiced its intention to move into the mobile market last month by announcing a partnership with O2. The wholesale deal will enable Sky to offer mobile services to its customers from 2016.

What Vodafone said

Group chief executive Vittorio Colao said European growth was due to more stable pricing:
We have achieved another quarter of improving revenue trends in most of our major markets. Growth in India has accelerated again, driven by data. In Europe, improved commercial execution in both mobile and fixed over the last few quarters, combined with strong data demand and a more stable pricing environment, is supporting the steady recovery in the top line.

In short

While today's results indicate Vodafone is on the right path for growth, it continues to lag behind its competitors in terms of entering the multi-play market. Investors will keep an eye on what Vodafone decides to do next.
Shares in the company have been relatively flat over the last few months, although on a slight upward trajectory.

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