Vodafone’s (VOD) first trading update since it got rid of chief executive Nick Read is much the same with the German, Italian and Spanish markets all continuing to underperform. Group organic service revenue growth slowed to 1.8 per cent from 2.5 per cent last quarter despite the UK growing 5.3 per cent. The company has moved to a cost-cutting footing but interim chief executive Margherita Della Valle also said the sales declines showed "we can do better". She said the goal was for Vodafone to "become a simpler business and deliver growth".
At the same time, there is trouble in Vodafone’s largest market, Germany. Service revenue declined 1.8 per cent in the December quarter, with customers defecting to other providers. Legislation that banned TV subscriptions being bundled with housing association rental contracts also proved an issue, and came at the same time as unpopular price rises. These contributed to almost 40,000 broadband customers going elsewhere, the telco said.
Spain was the worst-performing geography, falling 8.7 per cent due to increased price competition and lower roaming charges. Across all its geographies lower roaming charges are a problem - as economic conditions worsen in Europe, there will be less tourism which means less costly roaming charges for Vodafone.