LONDON (Alliance News) - Telecommunications firm Vodafone PLC reiterated its full-year guidance Friday, after a fall in total revenue and organic service revenue growth, slowing in the third quarter in line with expectations.
Shares in Vodafone were 2.2% lower at 140.94 pence on Friday.
For the three months ended December, revenue fell 6.8% to EUR11.00 billion from EUR11.78 billion a year prior. This was after both its European and Rest of World segments saw revenue declines. Vodafone said its performance was weakened by the sale of its business in Qatar as well as by foreign exchange headwinds.
In February 2018, the FTSE 100 company firm sold its 51% stake in joint venture Vodafone Qatar PQSC for EUR301.0 million to partner Qatar Foundation LLC.
Group service revenue fell 3.9% to EUR9.79 billion from EUR10.19 billion the year prior on a reported basis. Despite this, organic service revenue - excluding UK handset financing - during the quarter was up 0.1%.
This was slower, however, than the 0.5% organic service revenue growth reported in the second quarter.
The slowdown came after Vodafone's Rest of the World segment saw 4.9% organic service revenue growth, despite a decline in South Africa. This was offset, however, by a 1.1% fall in Europe. The performance in Europe represented "improving customer and financial trends in Italy, robust retail growth in Germany, reduced churn in Spain and a consistent performance in the UK."
Overall, Vodafone explained its mobile contract churn had reduced by 2.0 percentage points on the year prior.
"We have executed at pace this quarter and have improved the consistency of our commercial performance," said Nick Read, the newly appointed Vodafone chief executive officer.
"Lower mobile contract churn across our markets and improved customer trends in Italy and Spain are encouraging, however these have not yet translated into our financial results, with a similar revenue trend in Europe to the second quarter," added Read, who replaced long-standing boss Vittorio Colao in October.
"We enjoyed good growth across our emerging markets with the exception of South Africa, which was impacted by our pricing transformation initiatives and a challenging macroeconomic environment," Read continued. "Overall, this performance underpins our confidence in our full year guidance."
On Thursday, Johannesburg-listed Vodacom - in which Vodafone holds a 61% stake - reported it had experienced a difficult environment in its core South African business, despite third quarter revenue growing amid higher customer numbers.
For the three months ended December, Vodacom said revenue rose 1.5% to ZAR22.98 billion from ZAR22.64 billion the year prior.
South Africa revenue, however, declined 1.3% to ZAR17.98 billion from ZAR18.21 billion the year before. South African revenue was hurt by the impact of a pricing transformation strategy introduced by Vodacom and "customers optimising promotional data bundle allocations".
Looking forward at the global business, Vodafone reiterated Friday that it expects its group organic Ebitda growth to be around 3% for the full year to the end of March, excluding settlements and UK handset financing. Free cash flow - before spectrum costs - forecasts also wereretained around EUR5.4 billion.
For the year ended March 2018, adjusted Ebitda was EUR14.74 billion from revenue of EUR46.57 billion. Pre-spectrum costs free cash flow stood at EUR5.42 billion.
"We are moving to implement a radically simpler operating model and to accelerate our digital transformation, as demonstrated by the organisational changes we have announced in Spain and the UK," Read said.
"We are also assessing opportunities across our markets to improve asset utilisation through partnering," Read continued. "This week we announced the intention to extend our existing network sharing agreement with Telefonica O2 in the UK to include 5G services. This will enable us to deploy 5G services to more customers over a wider geographic area, and to do so at a lower cost. After these arrangements have been finalised, we also intend to explore opportunities to monetise our UK tower assets".
On Wednesday, Vodafone and Spanish telecommunications firm Telfonica SA - which owns the O2 network - agreed to extend their network sharing partnership to include 5G services.
In November, Read announced that Vodafone had introduced a "virtual" separation of its network of 58,000 masts or towers with an eye on a potential strategic partnership to manage them.
On Friday, Vodafone said that once the O2 agreement is finalised it will explore a "potential monetisation" of its joint venture with Telefonica, Cornerstone Telecommunications Infrastructure Ltd, which owns and manages the passive tower infrastructure for O2 and Vodafone.