Add to del.icio.us     Digg this

July 23, 2008

It appears that the telecommunications sector might start showing some signs of slowing down.

Vodafone just reduced its whole-year revenue estimates, citing that consumers were putting off buying new mobile devices.

The effect of the news also made the price go down on shares of Vodafone’s competitor Telefonica as well as its equipment supplier Ericsson.

Vodafone said that 2008 sales were forecast to be at the low end of its guidance range of between $79-$81 billion.

The operator blamed part of the slowdown on the market in Spain where a home construction slump caused many Vodafone subscribers to leave the country. It also cited lower-than-expected equipment revenue.

Vodafone's stock dropped over 14 percent, pulling the European telecoms index shares lower by almost 8 percent.

Telefonica shares dropped a tad over 7 percent and Deutsche Telekom 6.3 percent. Although Vodafone blamed the economy for most of its problems, some analysts said the European mobile markets were reaching saturation and the revenue slowdown was inevitable.

Belgium's Mobistar and Belgacom, Dutch KPN, Nordic operator TeliaSonera and Norway's Telenor are all due to report quarterly results later this week.

Six months ago, AT&T CEO Randall Stephenson and Verizon Communications COO Dennis Strigl disagreed on how the American economy was affecting each company’s performance.

When Stephenson pointed to the recession as a reason for an increase in bad debt at the wireless carrier, AT&T stock sank and the U.S. telecom market was severely battered.

But Strigl did say that his small business and enterprise markets were still performing as expected, although he did note a small increase in overdue and late-paying accounts.

Meanwhile, Ericsson reported a huge 70 percent drop in net profit for its second quarter, and a more than 65 percent cut in overall operating margins.

Add to del.icio.us     Digg this

    This article was featured on Business 5.0.

Source: Vodafone.