Telecom Lead Europe: Vodafone’s emerging market
strategies has failed to deliver during crisis period.
The significant point from these results is that emerging
markets are no longer sufficiently rescuing poor performances from Vodafone’s
European markets. Ovum’s research in 2008/2009 highlighted that telecoms revenues
tend to lag economic trends; people firstly experience deteriorating personal
finances before they start cutting back on telecoms spend. Therefore, as long
as the economic headaches persist in Southern Europe (and with concerns
mounting in the UK too), the road ahead will be uncertain for Vodafone and
other Europe-centric telcos.
Though a poor result was expected from the deteriorating
economic conditions in Europe in the quarter, it still makes uncomfortable
reading to see reported revenue declines of 7.7 percent for the group.
There is a caveat though – considering that revenues actually grew organically
by 1 percent, the strength of the British pound has played its role in making
this result seem worse.
Ironically, the main shining star in the results is
Verizon Wireless. Had Vodafone’s management capitulated to shareholder pressure
few years ago to sell the stake, the Vodafone group’s results would have even
being more worrying.
Vodafone is not alone in noting the impact of
competition, further regulator-mandated price cuts and the poor economy for
Europe’s telcos. Unfortunately, these dynamics are not going to change soon and
the industry will have to work a lot harder to stabilize its performance while
unlocking additional value in their business.
Emeka Obiodu, senior telco strategy analyst at Ovum
editor@telecomlead.com
