Friday 25 January 2019 8:39 am

Vodafone third quarter revenue slips amid fierce sector competition

Vodafone today said it maintains its full-year guidance despite a decline in revenues in the third quarter as the firm struggles with increasing competition in the telecoms sector. 

The FTSE 100 firm reported revenue of €11bn (£9.5bn), down by €0.8bn on the same period the year before.

Read more: Vodafone and O2 eye sale of phone mast joint venture CTIL to speed up UK's 5G rollout​


Vodafone said the decline in revenues was due to new accountancy measures, the impact of foreign exchange and the €301m sale of its Qatari business last year.

Organic service revenue grew 0.1 per cent on last year, a slowdown from the 0.5 per cent recorded in the second quarter, while in Europe service revenues slipped 1.1 per cent.

Vodafone also revealed it will stop installing Huawei equipment in its network until there is greater clarity over government concerns about spying.

Chief executive Nick Read said the company would temporarily stop the installation of new Huawei equipment in its core telecoms infrastructure in Europe.

“We are taking this moment to pause Huawei whilst we engage with security agencies, governments and Huawei,” Read said.

The comments come as tensions between Huawei and Western governments mount amid concerns Chinese authorities could use the firm’s equipment for espionage.

The update follows disappointing figures from Vodafone's South Africa division. Shares in the company fell 3.7 per cent yesterday after it revealed a 1.3 per cent fall in revenues in South Africa after a summer sale cut into margins.


Vodafone shares slipped just under one per cent in early trading.

Read said: “We have executed at pace this quarter and have improved the consistency of our commercial performance.

“Lower mobile contract churn across our markets and improved customer trends in Italy and Spain are encouraging, however these have not yet translated into our financial results, with a similar revenue trend in Europe to the second quarter.”

Yesterday Vodafone revealed it is eyeing a sale of its joint phone mast venture with O2 as it looks to prepare the infrastructure for the rollout of 5G.

Despite the slip in revenues, Vodafone maintained its full-year guidance of roughly three per cent earnings growth and cash flow of €5.4bn.

Read more: IBM links up with Vodafone for $550m cloud computing contract

Richard Hunter, head of markets at Interactive Investor, said Vodafone has suffered due to the “company’s complexity and fierce competition within the sector”.

“Even so, as has long been the case with Vodafone, the potential if not the execution is evident, which might explain the fact that the market consensus of the shares remains doggedly at a buy,” he added.

Read insisted there would not be significant costs should it decide to replace all Huawei 5G equipment, but said the process would take several years to resolve.

 

 

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