Britain’s Vodafone posted a rise in quarterly sales for the first time in nearly three years yesterday in the clearest sign yet that Europe’s mobile market is edging towards recovery.
The world’s second largest mobile operator has been hit hard by the constraints on consumer spending in its big European markets and by regulator-imposed price cuts. But yesterday it finally forecast 2016 core earnings growth on an organic basis following seven straight years of declines.
The full-year results follow updates from the likes of Telefonica and Deutsche Telekom which also showed signs of gradual, if slow, improvement.
Vodafone, which has 446 million mobile customers in countries ranging from Albania to Ireland, Qatar, India, South Africa and New Zealand, saw small improvements in Italy, Spain and Portugal while its biggest market Germany remained weak because mobile phone bills there fell.
“We have seen increasing signs of stabilisation in many of our European markets, supported by improvements in our commercial execution and very strong demand for data,” chief executive Vittorio Colao said.
We have seen increasing signs of stabilisation in many of our European markets
Shares in the group slipped 1.6 per cent in early trading, pulling back from a 9 per cent rise in just over two months as investors anticipated better results. Analysts believe the European mobile market is set to stabilise in 2015 and 2016 and should return to top-line growth after that, helped by demand for the more expensive fixed-line fibre services and superfast 4G mobile connections.
They believe Vodafone should be well placed to reap the rewards after it embarked on a programme to bolster its mobile speeds and either build or buy superfast fixed-line broadband networks.
“We have significant opportunities ahead of us, with only 13 per cent of our European mobile customers using 4G, and our market share in fixed services only a fraction of our share in mobile,” it said.
Vodafone reported a rise in fourth-quarter organic service revenue of 0.1 per cent, which followed 10 quarters of declines. It also forecast a range for 2015-2016 core earnings of £11.5 billion to £12 billion, which would indicate core organic earnings growth.
The group said it also intended to grow its dividends per share annually after a two per cent rise.