By Simon Zekaria
LONDON-- Vodafone Group PLC on Friday posted an acceleration in
key quarterly sales growth as the telecom giant hailed the
continued recovery of its European markets.
The world's second-largest mobile operator by subscribers after
China Mobile Ltd. said revenue excluding handset sales, currency
movements and mergers and acquisitions--a primary metric--rose 0.8%
in the three months ended June 30. This compares with a 0.1% gain
in the previous quarter of the last fiscal year, when it posted its
first growth for 11 quarters.
On the same basis, Europe revenue dipped 1.5% but Africa, Middle
East and Asia Pacific revenue, including India--a key Vodafone
market--rose 6.1%, as the operator shifts resources to
faster-growing economies.
Vodafone's overall first-quarter revenue dipped 0.9%
year-over-year to GBP10.1 billion ($15.6 billion), but rose 3.3%
excluding currency movements and mergers or acquisitions.
The company didn't disclose profit figures.
"We have made a good start to the year. Our emerging markets
have maintained their strong momentum and more of our European
businesses are returning to growth," said Chief Executive Vittorio
Colao.
Vodafone shares rose more than 3% in early trading in response
to the figures, valuing the company at GBP61.5 billion. Hargreaves
Lansdown analyst Richard Hunter said the update confirms Vodafone's
upward trajectory.
"To describe a company of Vodafone's size as a work in progress
may seem counterintuitive, yet the statement confirms the case," he
said.
For years, the Newbury, England-based company has been stung in
recent years by its high exposure to Europe's anemic wireless
markets; a region where it generates most of its sales. Pinched
consumer spending, intensive competition and regulation have
combined to curtail the company's performance in its main
geographies of Germany, Spain and Italy, as well as elsewhere.
It is spending billions of dollars to improve network quality
and speed across the world as consumers demand fast-speed
connection for mobile Internet data usage, Internet broadband and
media. In Europe, where it is rolling out fiber-optic to push its
burgeoning business, it sees the upgrade central to a turnaround of
its fortunes in the region.
Vodafone has also focused on deal-making across Europe's
fragmented telecom and media sectors, which are pursuing fixed-line
assets and exclusive content to shore up stagnating wireless
businesses. Operators on the continent are converging to provide
bundled offers to boost subscriber loyalty and revenue.
Friday, it said revenue excluding handset sales, currency
movements and mergers and acquisitions in Germany fell 1.2%, better
than a 3.1% decline in the fourth quarter. Vodafone spent $10
billion to buy Kabel Deutschland, a cable operator in the country,
as it battles with rival Deutsche Telekom AG.
In Italy and Spain, revenue on the same basis was down 2% and
5.5%, respectively, but an improvement on falls of 3.7% and 7.8% in
the previous three months.
Last month, Vodafone said it launched talks with Liberty Global
PLC over an " exchange of selected assets," throwing two European
powerhouses back into the center of a frenzy of European television
and communications deal making. Friday, Mr. Colao told reporters he
had "nothing new" to add on the conversations.
Vodafone has also recently shaken up its management in Europe,
which has become the touchstone of the group's strategy. Earlier
this week, its Europe CEO departed and heads of European markets
were charged to report directly to Mr. Colao as the firm moved to
boost decision-making in region.
Separately, Vodafone on Friday said it continues to consider an
initial public offering of its fast-growing Indian businesses,
without elaborating on any time frame for a decision.
Write to Simon Zekaria at simon.zekaria@wsj.com
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