Growth slowdown at Vodafone

VODAFONE, the world's largest mobile phone operator, confirmed what everyone had feared - that growth in the sector has slowed sharply. In the first three months of this year, Vodafone added 1.33m customers around the world taking its total to 101m. That is less than a third of the number added in the first quarter of 2001.

The biggest blow came in Germany where the group has rebranded the former Mannesmann D2 service under the Vodafone banner. There, it lost a net 399,000 customers, taking its total German customer base down to 21.4m as rivals such as mmO2's Viag Interkom sought to exploit the rebranding with an agressive sales push and price cutting.

Vodafone chairman Sir Christopher Gent said that over the year to end-March, customer growth had been 'better than anticipated'.

Turning to the key measure of average revenue per user Gent said: 'This year has seen ARPU stabilise in major markets ahead of our previous expectations. The improvement in mix towards higher-quality customers and the continued adoption of data services provide a solid base for an expected improvement in ARPU in most of our major European markets in the year ahead.'

Its shares have been on the ropes this week, pushed down towards £1, after dire trading statements from handset makers Nokia and Ericsson and disappointing numbers from its own 44%-owned US business Verizon. Vodafone said customer growth had been held back in the past year, as it disconnected a large number of unused pre-paid phones across Europe and pushed customers to sign contracts. It expects customer growth to restart in all main European markets during the second quarter of the financial year.

In Britain, the proportion of contract customers rose from 35% to 38% and in Germany from 40% to 43%, providing much more reliable income. Voadafone added just 22,000 customers during the quarter compared with 579,000 in the first quarter of 2001 and against analysts' average forecasts of around 180,000.

In Italy, Vodafone's third-largest market, it gained 219,000 subscribers and in Japan it gained 388,000 customers. Overall, the proportion of revenue coming from data services rose to 13% of total revenue last month against 10% in March 2001, as mobile operators looked to customers to send more text messages.