Vodafone Share Price: Telecom Giant Posts Strong Growth in Emerging Markets

on Jul 19, 2013
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iNVEZZ.com, Friday, June 19: Vodafone Group Plc (LON:VOD) today reported a 3.5 percent year-on-year decline in service revenue for the three months ended June 30 caused by challenging economic conditions in Europe. Southern Europe was a significant drag, with service revenue declining there by 14.4 percent. However, the Vodafone share price was up 0.47 percent at 192.25p as of 12:00 GMT today boosted by encouraging growth in developing markets.

The overall decline was the result of a mixed picture, with the company performing well in some markets, while struggling in others in the fiscal first quarter. Turkey and India performed strongly with service revenue up by 15.5 percent and 13.8 percent, respectively.
Vodafone’s performance has suffered from weaker results in Europe. Economic conditions in the Old Continent remain challenging “due to ongoing economic and regulatory pressures and increased competitive intensity in Northern and Central Europe” in the three months to end-June, the company said in a statement. In the UK, service revenue shrank 4.5 percent, while the German unit, which accounts for nearly one-fifth of Vodafone’s revenue, posted a year-over-year decline of 5.1 percent.

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Chief Executive Officer Vittorio Colao said economic conditions in Britain were “fragile” due to customers cutting back on spending and strong competition.
Vodafone has also suffered from price cuts across Europe, its biggest market, with tough competition driving prices down and increasingly stringent regulations capping the amount carriers can charge for roaming or connecting mobile calls.

“There is an excessive and to some extent unfair representation of roaming that it needs to be regulated. The market is already moving,” Colao said, attacking the push for lower roaming charges.
It seems however that the market is more concerned with the company’s positive performance in developing markets with the share price rising today following the company’s accouncement. Investors appear to have more or less accepted that the European mobile communication environment is not currently conducive to growth. Inroads into the huge growth potential in developing markets is being taken as the current benchmark upon which Vodafone and its peers should be judged on.

**Kabel Deutschland and Verizon**
!m[](/uploads/story/4161/thumbs/pic1_inline.jpg)Colao said there was “no update” to the situation around the company’s 45 percent stake in Verizon Wireless, its US joint venture with Verizon Communications. The US company is the majority owner of the US biggest mobile carrier and seeks to take full control of it this year. Analysts have estimated that by selling its stake, Vodafone could raise about $120 billion.

Colao commented on the company’s proposed acquisition of Germany’s biggest cable operator Kabel Deutschland, which is awaiting regulatory approval. He said that the deal “will create an excellent platform for our unified communications strategy in our most important market”.
**The Vodafone share price was 192.45p as of 12:43 BST, 19.07.2013.**

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