Vodafone delivers mixed message as reported revenue falls more than 6% in third quarter

Vodafone delivered a mixed performance in the third quarter, as ongoing struggles in its European business largely offset organic growth, although the company remained confident over its outlook and reiterated guidance for the full year.

In the three months to 31 December 2015, the FTSE 100 mobile network operator posted a 1.4% year-on-year gain in group organic service revenue to £10.28bn ($15.05bn, €13.5bn) – the metric has now increased for the last sixth consecutive quarters – though that declined 6.3% on a reported basis.

Vodafone said its recovery in Europe remained on track with that market contracting by 0.6% on an organic basis, compared with a 1.2% decline in the previous three months, and 7.1% on a reported basis.

Total revenue in the London-listed company's European business declined 6% year-on-year, dragged lower by a strong currency headwinds, while Vodafone's Africa, Middle East and Asia Pacific region saw organic growth of 6.5%, but a reported contraction of 3.6% compared with the corresponding period in 2014.

Vodafone added 506,000 net mobile contracts during the period, and 311,000 broadband customers, while its fixed line service revenue specifically was up 3.7% in Europe, with the firm now marketing high speed broadband to 69 million customers, with 29 million on the network.

"We have taken another step forward in the last three months, with the highlights being a strong performance in South Africa and improving trends in Germany and Italy", said group chief executive Vittorio Colao.

The group reported strong growth in data usage, which increased 68% year-on-year in the period, while the number of 4G customers grew 4.7 million to a total of 34.8 million, with 4G coverage now available on 84% of Vodafone's European market.

"Customers are increasingly recognising the quality of our networks, leading to strong growth in data usage and benefiting from the significant investments in 4G and fibre that we have made over the last two years," Colao added.

Vodafone indicated it will continue to face regulatory and competitive challenges in many markets, though it was confident the business was well positioned for the growth opportunities ahead.