Vodafone warns revenue will be hit by slowdown

Mobile phone giant, Vodafone, has warned that revenue will be hit by the economic slowdown.

It expects revenues to reach the lower end of £39.8 billion to £40.7 billion range, which is at the bottom end of analysts’ forecasts after the group said it is facing a more challenging operating environment.

Following the news, shares in Vodafone fell 10% to 134p in early trading today.

However, the mobile phone company added that cost cutting measures would mean that its profits for the current financial year were still set to meet its original forecasts.

In the quarter to the end of June, the company’s revenue totalled £9.8 billion, which was an increase of 19% from the previous year and was in line with analysts expectations.

Furthermore, the company still expects to make operating profit of £11 billion to £11.5 billion.

Commenting on the figures, Arun Sarin, Vodafone’s chief executive, said while revenue is expected at the bottom of the outlook range, we continue to focus on cost cutting to reiterate our operating profit and cash flow guidance for the year.

Mr Sarin added that a good performance was noted in Eastern Europe, the Middle East, Africa, Asia and the Pacific. However, weakness was experienced in the Spanish economy, where growing competition meant service revenues were down 2.5%.

Mr Sarin is due to step down at the end of the month and will be replaced by his deputy Vittorio Colao.

In the three months to the end of June, Vodafone added 8.5 million subscribers worldwide, taking its total to 269 million.

According to Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, the current economic climate has had an impact on Vodafone.

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