Why Vodafone's Quarterly Statement Disappoints the Market

LONDON --Vodafone Group (LSE: VOD.L  ) dropped 4 pence, or 2%, this morning to 179 pence after it announced its interim management statement for the quarter ended June 30.

Group revenue at 10.8 billion pounds was a reported 7.7% down on the previous year and group service revenue (10.0 billion pounds) decreased by 8.1%. European service revenue fell 1.6% with the U.K. (0.8%), Italy (7.7%), and Spain (10%) all contributing to the decrease. Bright notes were provided by Germany with a rise in service revenue of 4.2% and the emerging markets of Turkey (18.7%) and India (16.2%).

Free cash flow also fell by 24.9% to 0.9 billion pounds after capital investment of 1.1 billion pounds.

Vittorio Colao, chief executive, commented: 

Despite the difficult market conditions, particularly in southern Europe, we continue to make progress in the key areas of data, enterprise and emerging markets, while maintaining tight control of our cost base. We remain focused on driving through significant improvements to our customers' experience through our ongoing investment in our networks, stores and IT platforms.

The results underline the challenge faced by the telecoms companies in the current global climate, although in the United States, Verizon Wireless is performing well with service revenue growth of 8.2%

Vodafone is expected to complete the acquisition of Cable & Wireless Worldwide on July 27. The cash consideration for the acquisition of CWW is approximately 1,048 million pounds.

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