4G Provides a Boost to Vodafone Revenue


Vodafone UK has struggled in recent years, with the last time Vodafone posted a growth in core mobile revenues at group or UK level being 2012. However, it would seem that consumers’ insatiable appetite for data on its 4G network is reversing the network’s fortunes.

vodafone

Vodafone almost managed to reverse a continual slide in revenue during the third quarter of 2014. Although group revenues did decline by 0.4% during this time, to £9.8 billion, this was a big improvement on the 1.5% fall that had been seen in the previous quarter. Excluding the effect of regulatory issues, service revenues actually managed to grow by 0.2%.The main reason for the improvement appears to be the consumption of online videos and social media content on smartphones using superfast 4G.

The number of customers on the Vodafone 4G network has increased significantly, and these customers generally consume more data and pay more each month on their mobile contract than 3G customers. December 2014 was the busiest ever month for mobile data traffic on the Vodafone network, which peaked during the Manchester United vs. Liverpool football match as customers streamed the game live, or commented on it via social media. The challenge for Vodafone is now to turn this increase in 4G traffic into sustainable mobile revenue growth.

Unfortunately the picture in the rest of Europe is less positive, and overall revenues continue to decline. Improved consumer confidence in Germany has slowed the fall of regional sales to 2.7%, but there have been heavy losses in Spain and Italy. Service revenues are improving in Africa, the Middle East, and Asia Pacific with a growth of 6%.

According to Vittorio Colao, Chief Executive of Vodafone Group Plc, “We have achieved another quarter of improving revenue trends in most of our major markets. In Europe, improved commercial execution in both mobile and fixed over the last few quarters, combined with strong data demand and a more stable pricing environment, is supporting the steady recovery in the top line. We are confident that, over time, [the investment in next generation networks] will translate into further improvements in customer perception, average revenue per user and churn.”

Vodafone to join multiplay market

Vodafone is expected to launch its own bundled home broadband and TV packages in the UK, in addition to its mobile services. This is in response to the threat from the enlarged BT group following the acquisition by BT of the UK’s first 4G network EE, and the acquisition of O2 by Hutchison Whampoa. Companies such as BT and Sky are adding mobile to their fixed line services in order to create communications bundles, and Vodafone will need to take a similar approach and match BT’s fibre broadband coverage of the UK in order to remain competitive.

There are calls for the competition authorities managing the merger between EE and BT to force the separation of BT’s infrastructure arm ‘Openreach’ so that other groups aren’t obliged to use BT’s national broadband network. At the very least adequate access to this network should be guaranteed to allow fair competition between groups.