Markets

Vodafone endures more pain in Spain and Germany

Performance on the continent offsets strong UK numbers

Vodafone reported a slowdown in service revenue growth as more difficult trading in Germany, Italy and Spain offset a robust performance in the UK

Paul Sandle
Wed Feb 1 2023 - 09:04

Vodafone reported a steeper-than-expected slowdown in its third quarter, the first under interim boss Margherita Della Valle, after service revenue in Spain slumped and there was a further deterioration in Germany, its biggest market.

The mobile and broadband operator reported group service revenue growth of 1.8 per cent in the third quarter, down from 2.5 per cent in the second and missing market expectations.

Shares in Vodafone fell 2.6 per cent in morning trading, as analysts said there was no substantive strategy from the interim chief executive, who has been in the job for less than two months.

Della Valle, who stepped up after Nick Read resigned in December, kept the full-year forecast unchanged, but said the recent decline in revenue in Europe showed Vodafone could do better.

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“We’ve already taken action, including simplifying our structure to give local markets full autonomy and accountability to make the best commercial decisions for their customers,” she said on Wednesday.

Read was forced to cut Vodafone's full-year earnings range and cash flow guidance in November as higher energy costs and inflation took a toll.

He sought to appease investors’ concerns by announcing an additional €1 billion of savings in the period through March 2026, driven by a simplification of the group’s structure, including hundreds of job cuts in its central operations.

Less than a month later, Read had resigned.

Vodafone said intense competition in Spain resulted in a fall of 8.7 per cent in service revenue in the quarter.

It also reported a worsening performance in Germany, with a fall of 1.8 per cent in service revenue reflecting customer losses after it was badly prepared for past changes in legislation.

It said its operational problems in the country were largely resolved.

Service revenue in Italy fell 3.3 per cent, but Britain continued to perform strongly, with a rise of 5.3 per cent driven by good customer growth and price increases. – Reuters

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