Belt-tightening customers hit Vodafone sales

PLUNGING sales in southern Europe pulled Vodafone’s revenues down during the final three months of 2012, as wary consumers cut their phone bills.

The company saw revenues fall by two per cent year-on-year to £11.4bn as weakness in Spain and Italy moved service revenue – the amount customers pay on their mobile phone bill – down 17 per cent in southern Europe.

The picture in the UK and Germany, which are traditionally more resilient markets for Vodafone, also worsened, with service revenue falling by 4.5 and 5.9 per cent respectively.

Although Vodafone’s customer base has increased marginally in the UK to 19.5m, revenues fell to £1.2bn. The company blamed the decline on aggressive competition driving down prices, and squeezed wages meaning people were more wary of going over the minutes and texts included in their contracts.

“People are not cutting back on usage, they are just cutting back on spending,” chief executive Vittorio Colao said. He said he hopes to encourage people to sign up to Vodafone’s new Red contracts, which cost more but offer unlimited texts and minutes, as a way of managing the decline in out-of-bundle spending.

Colao shrugged off suggestions that its rival EE’s launch of the UK’s first 4G network had had a big effect, saying he expected that only a small number of “technology freaks” had signed up to the service.

EE yesterday said it would be extending its 4G coverage to 55 per cent of the population by June.