Slow growth in mature markets such as Italy and the U.K. caused Vodafone Group PLC to report only a slight increase in revenue for the six months to Sept. 30.
Revenue for the period was £15.6 billion (US$29.8 billion), with organic growth of 4.1 percent, the U.K.-based mobile phone operator announced Tuesday. Organic growth excludes customers that were added recently through acquisitions.
The company announced an advertising partnership with Yahoo Inc. designed to boost its growth. As part of the deal, customers in the U.K. who agree to view ads on their mobile phones will get discounts on Vodafone services.
Vodafone’s loss for the six months was £4.5 billion, due largely to a hefty charge of £8.1 billion for asset write-downs in Germany and Italy. Without the charge pre-tax losses were £3.3 billion, the company said.
The mobile phone market in Europe remains highly competitive and produced no organic growth from a year ago. Revenue from Germany, Italy and the U.K. actually declined when termination rate cuts are taken into account, Vodafone said.
The problems were offset somewhat by significant growth in emerging markets. Service revenue grew organically 40.2 percent in Egypt, 20.8 percent in South Africa and 31.3 percent in Romania. Revenue in the U.S., where Vodafone owns a stake in verizon Wireless, also grew well, by 18.2 percent, Vodafone said.
The operator said it is on track to meet its financial targets for the fiscal year.
Operators and handset makers across the mobile phone industry are facing slower growth from mature markets, where the vast majority of people already own a mobile phone. Operators like Vodafone are increasingly focusing on emerging economies, where they are reporting significant gains.
The operator is employing a number of initiatives to reverse its fortunes. Under the deal with Yahoo, the companies develop and test new mobile advertising offerings. Yahoo will become Vodafone’s exclusive display advertising partner in the U.K. and the pair expect to start rolling out the service in the first half of 2007.
In other moves to boost growth, in mature markets Vodafone hopes to steal minutes from landline services with offerings like At Home, which offers discounted mobile rates within a customer’s home. Vodafone has also begun selling bundles that include mobile and broadband services, launching such offerings in Germany, the U.K. and Italy.
