Pace Picks up as Vodafone Announce Growth

Vodafone Records 3.7% Organic Growth in Q1 Service Revenue, Bolstered by UK, Italy, and Germany Performance

Vodafone saw a positive start to the year as its first-quarter service revenue marked a 3.7% organic growth compared to the previous year. The company’s improved performances in key markets like the UK, Italy, and Germany contributed to this upswing.

Germany, being a significant contributor to the group’s sales, drew close attention. Although service revenue in the three months leading up to June 30th declined by 1.3% compared to the previous year, it showed improvement when compared to the preceding quarter (Q4), where it had dropped by 2.8%. Vodafone attributed this better performance to broadband price increases, implemented from May, which offset customer losses.

Vodafone Italy also showcased progress by slowing down the rate of decline in service revenue to 1.6% in Q1, compared to 2.7% in Q4. The turnaround was driven by the stabilization of its mobile prepaid base, strong growth in its corporate fixed-line operations, and the success of new digital services.

Meanwhile, the UK market was a significant contributor to Vodafone’s positive momentum, with a service revenue growth of 5.7%. This growth was fueled by an increase in consumer customers and price rises.

Vodafone clarified that the decline in its mobile contract customer base in the UK by 66,000 in Q1 was due to the disconnection of zero-value SIMs provided to businesses during the COVID pandemic. However, excluding these SIMs, the mobile contract customer base remained stable despite annual contractual price increases. Consumer contract churn also remained stable year-on-year.

On the fixed side, Vodafone added 42,000 broadband customers, taking its total customer base to 1.3 million.

Although the numbers themselves may not be groundbreaking, the improvement in key metrics signals stability and positive momentum for Vodafone during a crucial period for the company.

CEO Margherita Della Valle expressed optimism about the progress made so far in transforming Vodafone. The company achieved a better service revenue performance in most markets, with strong trading in its Business segment and a return to service revenue growth in Europe.

It’s worth noting that Della Valle’s tenure as CEO is still in its early stages, and the company’s turnaround plan includes up to 11,000 job cuts and a £15 billion merger plan with rival Three’s UK operation. Investors are keenly observing management’s efforts to steer the company in the right direction.

At the time of writing, Vodafone’s share price had increased by around 4%, indicating the market’s encouragement by these results. However, the shares were still down over 40% from the previous year, suggesting there’s work ahead to restore Vodafone to its former glory.

To aid in this transformation, Vodafone has appointed Luka Mucic as its new Chief Financial Officer, joining from business software giant SAP, where he served as CFO from 2014 until March of this year. With his track record of international leadership, corporate repositioning, and value creation, Mucic’s addition to the team is expected to support Vodafone’s strategic priorities of customer focus, simplicity, and growth. Both Della Valle and Mucic are determined to lead Vodafone through this critical phase of transformation.