Vodafone shares dip after revenue warning

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The Independent Online

The mobile phone giant Vodafone today felt the squeeze of "more challenging" trading conditions as it warned of revenues at the bottom end of its forecasts this year.

The company suffered from a weaker economic environment and lower than expected sales of equipment such as handsets and USB data cards in the three months to June 30.

This will leave annual revenues at the foot of its expected range of between £39.8 billion and £40.7 billion, the group added.



Shares tumbled 10 per cent in the wake of today's update.

The slide comes as Arun Sarin prepares to hand over the reins to deputy chief executive Vittorio Colao next week after five years in charge.

The company said business in Spain had been hit by heavy competition and a fall-off in customer spending as consumers tightened their belts.

In the UK, where the group has around 18.5 million customers, organic revenue growth slipped to 2.1 per cent, which the group also put down to "continued competition in the UK market and signs of an economic slowdown".

Across the wider European market, it was only the increased strength of the euro against the pound compared with a year earlier which boosted revenues.

Stripping out the beneficial currency effect and the impact of acquisitions, organic revenues in Europe actually declined by 0.2 per cent over the quarter.

But despite the revenue warning, Vodafone still expects to achieve operating profits of between £11 billion and £11.5 billion as it looks to cut costs across the business and benefits from emerging markets.

Mr Sarin said: "Notwithstanding this more challenging operating environment, we continue to benefit from a diversity of assets and services."

Vodafone's EMAPA operation - which includes fast growing markets in Eastern Europe, the Middle East, Africa and Asia, and Pacific regions - lifted overall revenues by more than 30 per cent.

In India, where the group bought Hutchison Essar last year, Vodafone added more than five million customers in the first quarter.

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