Vodaphone News Update: Decline in Sales

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Vodaphones sales over the past year experience dramatic decline, as a result of the poor economic climate due to the recession.

Vodaphones full year sales for this year have experienced the largest quarterly decline in its main revenue measure. In 8 years Vodaphone have not experienced a loss as significant as this, and this years is largely down to the poor economic climate and recession  which has grip over Europe at present.  In particular Spain and Italy’s meagre economies have made a considerable contribution to the drop in sales at Vodaphone.

In 2011, in comparison to the £7.7bn Vodaphone earned, the current earnings have diminished down to £673m. This again drawing back to Italy and Spain is due to their result of writedowns which concluded to a sum of £1.8 billion. In terms of annual revenue, again the firm has dropped by 4.4%. This decline in annual revenue has mainly been a result of Vodaphone aiming to hold on to their existing customers by making their product and service prices more competitive continuing to lower them. Whilst this has worked to an extent as customers will be drawn in by cheaper prices, inevitably annual revenue has taken a hit and been less prosperous.

Vitorio Colao, the chief executive officer of Vodaphone  touched upon the tough times the company is experiencing, drawing upon the fact that it is a culmination of a weak economic climate, specifically in Southern Europe. This however,  although at present could be seen as threatening, long term the firm is looking optimistic, as the prospects for the future are more hopeful.

Future of Vodaphone

Additionally, although the economic climate is strained in some areas, particularly southern Europe, Vodaphone is not just reliant on certain areas, and has market presence in numerous other regions which continue to do well, even in light of the other parts of Europe which are struggling. This broad geographical placement of Vodaphone’s market presence enables maximum exposure , making growth in alternate areas possible even when other areas aren’t.

However, with that being said, Verizon wireless, who gave Vodaphone a 30.5 percent profit from its stake to £6.4bn is giving Vodaphone a reason to be optimistic. Vodaphone has a 45 percent stake in the American unit, and recently there has been speculations that Vodaphone might result in selling off its share in Verizon in order to replenish its core structural operations.  $100 billion could potentially result from the deal, leading it to be the 3rd biggest deal to date.

Whilst there is speculation of this acquisition to take place, it has also been hinted that there is in fact no actual intention of this happening, with  Verizon continuing to stay a part of Vodaphone.

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