Yahoo Finance FTSE 100: Vodafone shares up as UK price rises boost sales
Vodafone (VOD.L) shares rose on Monday after the mobile giant posted quarterly growth in its service revenue, driven by a sales growth in the UK that offset a reversal in its German market.
Shares in the FTSE 100 (^FTSE) telecoms group gained as much as 0.2% in mid-morning trade in London.
"Vodafone’s share price continues to have all the vitality of a beached whale, having struggled to make any meaningful progress for more than a decade," said Russ Mould, investment director at AJ Bell.
Europe’s largest broadband provider reported a rise in sales over the first quarter as price increases helped to offset weaker trading in its biggest market, Germany.
The phone operator said it was on track to deliver its full-year guidance, expecting adjusted earnings to be between €15bn and €15.5bn before interest, depreciation, tax and amortisation.
Total revenues rose by 1.6% in the three months to 30 June to €11.3bn ($11.6bn, £9.6bn), from €11.1bn a year earlier, with service revenues up 2.5%.
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It suffered a 0.5% fall in service revenue in Germany, with its TV customer base dropping by 79,000, and a 34,000 decline across its broadband service.
However this was countered by domestic growth, with services revenue jumping 6.5% across the UK, compared to 2% in the previous quarter.
Vodafone said the domestic improvement was partly driven by annual price rises of around 8% to 9% (£1 or £2) for each customer, adding it did not see a "material" increase in customers quitting the group while it added 18,000 contract customers in the quarter.
Mould added: "Vodafone’s latest trading update lacked the hoped-for major acquisition which could have really moved the dial.
"Instead the company saw service revenue from its largest market, Germany, slip back as regulatory changes resulted in losses in its TV and broadband business.
"This was balanced out by price rises in the UK and the return of roaming charges as Britons jet off on holiday but no longer take their mobile data package with them."
Its business in inflation-hit Turkey also provided a boost, up 35.8% and adding 0.3 percentage points to the total group numbers. Inflation in the country soared to 80% in July, the biggest annual increase since 1998.
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Nick Read, CEO of Vodafone, said: "Whilst we are not immune to the current macroeconomic challenges, we're on track to deliver financial results for the year in line with our guidance. Our near-term focus on our operational and portfolio priorities remains unchanged.
"We've made good progress towards stabilising our commercial performance in Germany, and we continue to actively pursue opportunities with Vantage Towers and to strengthen our market positions in Europe."
