LONDON-- Vodafone Group PLC Friday said some of its key European
markets are showing signs of stabilization, even as it recorded
lower-than-expected growth in quarterly revenue.
The world's second-largest mobile operator by subscribers after
China Mobile Ltd. said revenue for the three months ended June 30
rose 6.2% year-over-year to GBP10.2 billion ($17.3 billion), lower
than market consensus expectations of GBP10.35 billion.
Its first quarter revenue excluding handset sales and excluding
mergers and acquisitions--a key metric--worsened, falling 4.2%,
compared with a 4% decline in the fourth quarter and a 3.5% decline
in the same period last year.
On the same basis, Europe revenue dipped 7.9%. Africa, Middle
East and Asia Pacific revenue, including India--a key Vodafone
market--rose 4.7%, as the operator shifts resources to fast-growing
telecom economies.
The company didn't disclose earnings figures.
Chief Executive Vittorio Colao said performance in several
European markets are beginning to stabilize on a quarterly
basis.
Newbury, England-based Vodafone has seen results stung by its
high exposure to Europe's anemic wireless markets; a region where
it makes the lion share of its sales. Two months ago, it wrote down
the value of its European operations by over $11 billion.
It is spending billions of dollars gathered from the sale of its
45% stake in Verizon Wireless, a U.S. mobile joint venture, to
improve network quality and speed across the world. In Europe, it
sees the upgrade central to a turnaround of the region's
fortunes.
Vodafone has also focused on deal-making across Europe's
scattered telecom and media sectors as operators pursue fixed-line
assets and exclusive content to shore up stagnating wireless
businesses. It has spent $20 billion on cable operators in Germany
and Spain over the past year to bolster its position.
Vodafone shares closed Thursday at 197.9 pence, valuing the
company at GBP52.32 billion. The stock has fallen 19% in the year
to date.
Berenberg analysts say Vodafone shares will find outperformance
difficult through the next few quarters as the impact of network
spending on profit margins and cash flow becomes more visible.
Write to Simon Zekaria at simon.zekaria@wsj.com
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