Vodafone, a European mobile group, reported further deterioration in Germany, its largest market, during the third quarter. This decline contrasts with stronger performance in Britain, Turkey, and Africa.
As a result, Vodafone’s shares fell over 6%, erasing gains made over the past year.
In Germany, service revenue dropped 6.4% in the quarter, worsening from a 6.2% decline in the second quarter. The company attributed this downturn to the ongoing effects of changes in pay-TV laws and heightened competition in the mobile sector.
Chief Executive Margherita Della Valle stated that the actions she has taken to improve the German business, including leadership changes, will take time to yield profit.
She noted, “We are continuing to invest in the turnaround of our German business and we are starting to see improving customer trends, although conditions have become more challenging in the mobile market.”
Vodafone faced challenges due to the end of bulk pay-TV contracts in apartment blocks in Germany, which fully took effect last year. The company has lost over half of the customers affected, leaving it with 4.1 million households by the end of December.
Della Valle mentioned that the losses were fully in line with expectations but that the financial impact would take several quarters to materialize.
She added, “On top of that, the market has been a bit more promotional than usual around Christmas, Black Friday.”
Vodafone indicated that its core earnings in Germany would be lower in the second half compared to the first half. Della Valle explained that this was due to one-off events and a more promotional environment.
For the group overall, Vodafone continues to expect full-year core earnings to reach around 11 billion euros and adjusted free cash flow of at least 2.4 billion euros.
The group’s total service revenue increased by 5.2% in the three months ending in December, driven by growth in the UK and strong performances in Turkey and Africa.
In Britain, where Vodafone’s merger with rival Three is set to complete in the coming months, service revenue rose by 7.6%. This growth was supported by the addition of 37,000 mobile contract customers and 72,000 broadband customers.
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