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Vodafone UK sales down 3.2pc as mobile base falls below 18m customers

Paul Withers
July 22, 2016

UK business continues to struggle as billing system issues rumble on

Vodafone UK sales fell 3.2 per cent to ‚¬1.758 billion in the quarter ended June 30, as its mobile base dropped below 18 million customers.

This is according to the mobile operator’s financial results for its Q1, which were released this morning.

The service revenue decline compares to flat growth in the previous quarter. Vodafone said this reflected the impact of operational challenges following the migration of its billing system, lower out of bundle revenues and the benefit of a “large” enterprise contract win in the same quarter a year ago.

Mobile service revenue declined 3.6 per cent from the previous three months to ‚¬3.906 billion. This compared to a 1.9 per cent fall in the prior quarter.

Vodafone said consumer contract in-bundle revenue growth was more than offset by a decline in out of bundle usage compared to 12 months ago and the impact of expanding roaming propositions in enterprise mobile.

Customer base below 18m

It added 26,000 contract customers in the quarter but lost 249,000 prepay connections,seeing its overall base fall 17.974 million.

However, Vodafone’s contract churn did improve, to 15.5 per cent from 18.9 per cent in Q4, which it said was supported by stabilising customer service levels.

The mobile operator had 7.5 million 4G customers at the end of the quarter, with 4G coverage of 91 per cent.

Fixed service revenue, which is predominantly enterprise related, declined 1.8 per cent on an organic basis to ‚¬405 million, which Vodafone again said reflected a large enterprise contract win in the same quarter last year and having been supported by strong carrier revenue growth.

It did however add 28,000 broadband customers in Q1 to take that base to 137,000 subscribers, while adding that trials for Vodafone TV are underway.

Vodafone UK’s soon-to-be CEO Nick Jeffery

On Tuesday, Vodafone announced that Group chief executive Nick Jeffery (pictured) would replace Jeroen Hoencamp as CEO on September 1. He is stepping aside to head up its proposed new JV with Liberty Global in the Netherlands.

It followed Ofcom’s quarterly report on July 8 which revealed Vodafone was the most complained about operator in the UK in Q1 – an unwanted title it now holds for six successive quarters.

Although complaints numbers improved from 32 to 29 per 100,000 customers, it was still more than triple what its nearest rival, TalkMobile, received.

Group sales fall

Meanwhile, Group revenue was down 4.5 per cent year-on-year to ‚¬13.377 billion in the quarter, but Group service revenue increased 2.2 per cent on an organic basis to ‚¬12.278 billion.

Revenue in Europe fell 3.2 per cent to ‚¬8.715 billion, with foreign exchange movements contributing to a 1.9 per cent negative impact, while service revenue grew 0.3 per cent organically to ‚¬8.273 billion.

Focused on UK improvement

Vodafone Group chief executive Vittorio Colao (pictured) said: “We continued to make good progress during the first quarter. In Europe, our growth remains stable despite regulatory pressure on roaming revenue, with good performance in Germany, Spain and Italy while we are focussed on improving our performance in the UK.

“Our growth momentum in AMAP remains strong, with excellent performance in South Africa, Turkey and Egypt and ongoing recovery in India. Customers in multiple markets are attracted by our ‘more-for-more’ commercial offerings of larger data bundles and extra services, while we are seeing continued success with our fixed broadband and enterprise strategies.’”

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