Vodafone’s sales rise stirs recovery hopes

BRITAIN’S Vodafone posted a rise in quarterly sales for the first time in almost 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, fierce competition in India and by regulator-imposed price cuts around the world.

But yesterday it finally forecast 2016 core earnings growth on an organic basis following seven consecutive years of declines. That follows updates from the likes of Telefonica and Deutsche Telekom, which also showed signs of gradual, if slow, improvement in Europe.

Vodafone, which has 446 million mobile customers in countries ranging from Albania to Ireland, Qatar, India, South Africa and New Zealand, posted fourth quarter organic service revenue, which strips out oneoff costs such as handsets, up 0.1 percent following 10 quarters of declines.

That was helped by 6 percent growth from the Africa, Middle East and Asia Pacific division and an improvement in Europe where it fell by 2.4 percent, compared with the 2.7 percent fall in the previous quarter.

“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.

Shares in the group slid 2 percent in early trade, pulling back from a 9 percent rise in just over two months as investors anticipated the better results.

“For some time now, Vodafone has been trying to shake off the shackles of being regarded as a company which is ‘ex growth’, and today’s annual reflection points toward some future promise,” Hargreaves Lansdown Stockbrokers said.

Analysts believe the European mobile market is set to stabilise in 2015 and 2016, and return to top-line growth after that, helped by demand for the more expensive fixed-line fibre services and superfast 4G mobile connections.

They believed that Vodafone was well placed to reap the rewards after it had embarked on a programme called Project Spring, which was designed to bolster its mobile speeds and either build or buy superfast fixed-line broadband networks. – Reuters