Vodafone revenue and profit drop as European woes continue

Vodafone's revenue dropped 4.2% for its fiscal year to March 31, because of tough economic conditions, particularly in Southern Europe.

The operator's group revenue dropped to £44.4 billion for the year ended March 31, and net profit fell sharply from £7 billion to £673 million.

Behind those numbers are Vodafone's problems in Southern Europe where revenue was down by 16%. The effects of "severe macroeconomic weakness were intensified by strong competition," according to Vodafone said. Revenue rose 2.7% in Northern and Central Europe but fell 2.9% in Africa, the Middle East and Asia-Pacific.

Operators today struggling to balance falling revenue from voice and messaging services with growth in revenue from data. In Vodafone's case, revenue from the first two decreased by £3.8 billion, while data revenue grew by just £469 million.

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Smartphone owners are the heaviest data users, and Vodafone reported that 54.8% of its European customers on a contract now have smartphones, up 9.9% points year on year. At the same time, Vodafone also got a big boost from its fixed line business, where revenue grew by over £1 billion to £4.7 billion.

Vodafone is looking for growth in mobile data and fixed line services, as well as the enterprise sector and emerging markets. The operator has accelerated the integration of Cable & Wireless Worldwide and TelstraClear - the two fixed line businesses Vodafone acquired during the year - to help advance its enterprise and unified communications strategies, Vodafone said.

The tough economic climate in Southern Europe is likely to remain, but Vodafone is still bullish about its long-term prospects thanks to a growing appetite for high-speed data there and companies looking to make mobility a more integrated part of their IT infrastructure, it said.