Interim management statement from Vodafone

Reported Group revenue for the quarter was £11.4 billion and Group service revenue was £10.4 billion. On an organic
basis Group service revenue decreased by -2.6%. Excluding the impact of MTR cuts, Group service revenue decreased by -0.4%. Emerging market operations continued to grow and saw an increasing uptake of data services across the Group, but this was offset by macroeconomic, regulatory and competitive pressures across Europe which intensified in the quarter.

Northern and Central Europe service revenue decreased by -0.9%, a -1.6 percentage point decline compared to the previous quarter. In Germany service revenue declined by -0.2%, reflecting a cut in MTRs on 1 December 2012, lower gross customer additions, and an ARPU decline in the consumer contract segment. Service revenue in the UK fell by -5.2% with a decline in ARPU and lower out-of-bundle usage. In the Netherlands service revenue fell by -3.5%, with a decline in roaming revenue and out-of-bundle usage, and increased popularity of value plans in the market. In Turkey service revenue grew by 18.4% driven by strong growth in data and enterprise, and the continued expansion of the contract customer base.

In the UK service revenue decreased by -5.2% principally driven by continued intense competition and macroeconomic weakness, which impacted consumer confidence and, in turn, led to lower out-of-bundle usage, as well as the impact of an MTR cut effective from April 2012. Data revenue grew by 6.2% due to higher smartphone penetration and growth in smartphones sold with a data bundle. There has been a positive uptake of our new Vodafone Red integrated price plans, which were launched in September 2012. The network sharing joint venture between Telefónica UK and Vodafone UK launched in November 2012.

Vittorio Colao, Chief Executive, commented “Our results continue to reflect very difficult market conditions in Europe. We are addressing this through firm actions on cost efficiency, and continuing to invest in areas of growth potential. We continue to make progress in our Vodafone 2015 strategy, with good revenue growth in data and emerging markets, the launch of LTE services in another four markets and the acquisition of new spectrum. Vodafone Red, our new strategic pricing approach in Europe, has been launched in five markets with positive early take-up, and to drive growth in enterprise we have created a new enterprise business unit and accelerated our integration plans for Cable & Wireless Worldwide.”

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