Vodafone dials up rise in revenues despite global travel woes: City reaction

Vodafone is continuing to suffer from the collapse in international travel, denting income from lucrative roaming charges, though the mobile phone giant has seen a recovery in sales since the height of the pandemic.

In a trading update for its first quarter, the UK-headquartered group said roaming and visitor revenues grew 56 per cent year-on-year as some restrictions eased compared to the height of the pandemic but remain down 54 per cent on the period before the coronavirus crisis.

Vodafone enjoys a significant chunk of profits from charging overseas visitors to use their networks or join other networks when travelling.

Retail outlets reopened during the three months to the end of June, helping increase revenues across most regions, although there was a notable fall in Italy.

Vodafone retail outlets reopened during the three months to the end of June, helping increase revenues across most regions. Picture: Paul Faith/PA Images

Despite restrictions easing on high streets, store visitors remain down 40 per cent on pre-pandemic levels.

In the UK, Vodafone said service revenues lifted 2.5 per cent in the latest quarter, with notable growth in prepaid services. This compares to a 0.6 per cent fall in the first three months of 2021.

The easing of some travel restrictions helped increase roaming charge revenues and work on its fixed line projects in its business division resumed.

With stores reopening again in April, 65,000 new contracts were signed in them. The group also announced an exclusive partnership with Carphone Warehouse’s owner.

The UK business outperformed European rival regions, with Germany up just 1.4 per cent while Italy saw a 3.6 per cent decline and Spain was up just 0.8 per cent.

Overall group service revenues grew 3.3 per cent to €9.4 billion (£8bn) in the three months to the end of June.

Chief executive Nick Read told investors: “I am pleased to report that we are back to service revenue growth in Europe, as well as Africa. This growth was broad-based within both consumer and business segments, with the vast majority of our markets contributing.

“This is a result of our commercial and operating momentum built over the past three years as part of our strategic transformation.

“In Europe, the operating and retail environment has not yet returned to normal conditions, but we are delivering a good service revenue performance.”

Richard Flood, investment manager at wealth management firm Brewin Dolphin, said: “Vodafone’s quarterly update is a positive surprise, with revenue returning to growth across most of its markets.

“This is partly due to the easing of Covid restrictions and will be particularly welcome for shareholders, as the shares have recently traded weakly and are down 13 per cent in the past three months.”

Richard Hunter, head of markets at Interactive Investor, noted: “Vodafone’s grind towards higher growth continues, with a combination of strategic success and an improving trading environment playing into the mix.

“A more obvious thorn in the side of late has been the inevitable reduction in roaming and visitor revenues given the extremely limited amount of international travel.

“The current glass can be seen as half-full or half-empty, with revenues ahead by 56 per cent year-on-year, but still down by 54 per cent on pre-pandemic levels.”

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