By Keith Mitchell
Vodafone made headlines earlier this summer when they announced quarter-over-quarter revenue growth for the first time since 2008 (http://bit.ly/cUoAef). Seeing as many analysts had predicted a revenue decline, this is broadly viewed an impressive achievement and a positive indicator for the overall economy. Indeed revenue growth is always better than a decline, and we may well be climbing our way out of the economic hole we’ve inhabited for the past two years. But does this really signal a turnaround for the largest wireless company in the world outside of China?
A closer look at the results reveals that revenue in Western Europe declined 1.7%, with only Germany and the UK showing modest growth. Declines in the rest of the countries dragged the financial results into the red. Operationally, voice was predictably in negative territory posting an 8.6% decline. Surprisingly, messaging was only modestly positive, posting 1.5% growth.
So where is the growth coming from? Geographically, look to the East and South. Operationally, look to data.
Revenue in Africa/Central Europe grew by 3.7%, and revenue in AsiaPac/Middle East grew by a whopping 10.5%. It is important to note that these two regions now make up over a third of total revenue. Operationally, data led the way with 23.3% growth in Europe.
While Vodafone’s quarterly performance metrics may or may not be indicative of macro-economic improvements, we can certainly draw one conclusion from these results: the company’s future growth will come from providing data services to emerging economies. Mobile Internet services that leverage the assets of Vodafone’s network will mark the future of the company. This will be aided by their ability to effectively market themselves in Central Europe, Middle East, Africa and Asia/Pac. Keep an eye out for Vodafone’s next earnings announcement in early November for further proof points.