Vodafone commits to 'proactive portfolio actions' as update reveals improved revenues

Mobile phone giant Vodafone said revenues in the UK improved in the final three months of 2021 with more visitors leading to an increase in roaming charges.

The company said revenues were up 0.9 per cent in the quarter compared with a 0.6 per cent rise in the previous three months, although there was a fall in business customers.

Bosses said they signed up 152,000 new mobile customers, with good demand for iPhones and a successful Black Friday campaign.

Customer loyalty rates improved, with churn down by 1.9 percentage points year on year to 12.5 per cent, it added.

Richard Hunter, head of markets at Interactive Investor, says that 'for all the progress Vodafone has become a company which has yet to fulfil the potential provided by its scale, cash generation, experience and global sprawl'.

Vodafone’s broadband customer base increased by 29,000 in the quarter, meaning the company now offers the service to nearly one million customers.

The falls in business contracts were due to pressure on persuading multinational customers to renew and a decision to end a multinational contract in the previous quarter.

Vodafone’s UK business fared better than its Italian and Spanish offerings, which saw revenues dip 1.3 per cent and 1.6 per cent respectively. In both countries, the business said price pressures and tough competition were to blame.

Vodafone’s biggest market - Germany - saw an increase in revenues of 1.1 per cent driven by business customer usage.

But the company was hit by stricter Covid-19 restrictions, with footfall to stores 50 per cent below pre-pandemic levels.

Globally, Vodafone said revenues for the three months to the end of December rose 4.3 per cent to €11.7 billion (£7.8bn) and flagged good growth in Africa, where it has some 187 million customers in eight countries.

Group chief executive Nick Read said: “Our team has delivered another solid quarter, demonstrating the sustainability of our growth strategy and medium-term ambition. This performance keeps us firmly on track to deliver [full-year] results in line with the higher guidance we set out in November.

“We are also committed to creating value for our shareholders through proactive portfolio actions and continuing to improve returns at pace,” he added.

Susannah Streeter, senior investment and markets analyst at financial services group Hargreaves Lansdown, said: “Speculation surrounding a deal with Three and a fresh tie up in Italy is set to intensify with this update, given Vodafone has reiterated its commitment to ‘proactive portfolio actions’ to try and keep shareholders happier.

“There is some relief that Omicron has not disrupted lucrative roaming fees too badly.

“Simplifying the overall structure has been part of the game plan for management but progress so far has done little to revitalise the share price, which only moved upwards in recent weeks over speculation of fresh deals and the arrival of Cevian Capital to the party. It’s hoped the activist investors will help shove management into some faster moves.”

Richard Hunter, head of markets at Interactive Investor, added: “For all the progress Vodafone has become a company which has yet to fulfil the potential provided by its scale, cash generation, experience and global sprawl.

“The extraordinary expense of 5G participation will continue to eat into cash,” he added.

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