Trading at Vodafone worsened in the third quarter as fierce competition in northern Europe compounded the weak economies of Spain and Italy to push organic service revenue down 2.6%. The worse than expected plunge in the key measurement in the three months to December 31 marks an acceleration from the 1.4% fall recorded in the second quarter by the world's second largest mobile operator. That fall in the second quarter had marked the first drop since 2010. The group, led by Vittorio Colao, was hit by fewer customers making calls in Spain and Italy and other southern European markets, regulation in Germany and a deteriorating performance in Britain, where it is struggling with fierce competition and regulatory changes. The group has also faced slowing growth in its emerging markets such as India and South Africa. "Our results continue to reflect very difficult market conditions in Europe," Colao said. "We are addressing this through firm actions on cost efficiency, and continuing to invest in areas of growth potential." The group kept its outlook unchanged for free cash flow for the year, after it nudged it lower at the first half results in November. Telecoms firms across Europe are struggling with the cost of building networks that offer faster speeds for consumers increasingly accessing the internet on mobile devices.
They are also facing regulatory changes across the region and fierce competition. Dutch telecoms group KPN on Tuesday announced plans for a 4-billion-euro rights issue, in part because it paid more than expected for a 4G mobile licence.