Vodafone dials up stronger numbers amid post-lockdown getaway

Telecoms giant Vodafone has revealed a recovery in mobile phone sales since the pandemic, with increased customer loyalty across Europe.

In the UK, revenues jumped 6 per cent to €3.2 billion (£2.7bn) in the six months to the end of September, although part of this jump was due to a favourable exchange rate.

Customers also started travelling again, boosting Vodafone' s bottom line through roaming charges and visitor revenues to the UK, the company said.

Revenues from mobile services rose 1.3 per cent thanks to strong growth in its consumer division, offsetting a fall in its business connections services.

The return to growth in the UK comes after several quarters of falling revenues and made it one of Vodafone's strongest markets.

A further 149,000 mobile contract customers were added with strong growth in digital sales, which now make up 33 per cent of total business in the UK.

Contract churn remained stable at 12.5 per cent year-on-year, the company added, and bosses said they recently launched an exclusive retail partnership with Dixons with improved terms compared to previous arrangements.

However, the business division struggled as the company revealed it pulled out of a large but unprofitable multinational contract and a reseller went into administration.

The return to growth in the UK comes after several quarters of falling revenues and made it one of Vodafone's strongest markets.

By comparison, its largest region - Germany - saw service revenue growth of 0.9 per cent whilst Italy and Spain both fell 2.8 per cent and 0.7 per cent respectively.

Globally, revenues rose from €21.4bn to €22.5bn, although pre-tax profits fell 24 per cent to €1.3bn.

Richard Flood, investment manager at wealth management firm Brewin Dolphin, said: “Vodafone’s results are good and very much in line with investors’ expectations.

“Clearly, however, investors remain sceptical of the company’s growth and return prospects – the share price has been weak, falling more than 20 per cent in the past six months in a generally strong market, despite being supported by a dividend yield of 7 per cent. It is hard to see what the catalyst is for the share price trend to improve.”

Nicholas Hyett, equity analyst at financial services group Hargreaves Lansdown, noted: “With pandemic restrictions in retreat, Vodafone is starting to show signs of business returning to normal.

“Handset sales are up as consumers look to update their phones before venturing back into the world, while lucrative roaming fees are back as international travel resumes.

“While there are a whole host of adjustments related to ongoing restructuring muddying the picture, the underlying trend seems to be one of gathering momentum.”

He added: “Having done significant work to streamline its business Vodafone is now a more focused operation. Most recently African operations have been gathered under subsidiary Vodacom – with Egypt next to be shuffled in – and the Vantage Towers IPO [initial public offering] has moved infrastructure assets outside the main group. Going forwards the focus is firmly on capitalising on the group’s strong European market positions.

“All this is sensible – and we’re pleased to see the group benefiting from changes to the economic winds,” he added.

A message from the Editor:

Thank you for reading this article. We’re more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers. If you haven’t already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription: www.scotsman.com/subscriptions