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Vodafone interim results: Revenue up as CEO Nick Read bets on EU recovery fund to power growth

·2-min read
Vodafone customers are facing disruption to their mobile data and broadband services (PA)
Vodafone customers are facing disruption to their mobile data and broadband services (PA)

Vodafone is betting that the EU’s blockbuster €750 billion Recovery Fund can drive growth over the next few years, as CEO Nick Read says his attempts to build a platform for “sustained growth” are bearing early fruit.

Telecoms giant Vodafone on Tuesday reported strong half-year performance, upping guidance as revenue rose.

Income climbed 5% to €22.5 billion and adjusted earnings were up 6.5% to €7.5 billion. Headline operating profit fell 22% to €2.6 billion due to one-off gains from a deal last year. When that was excluded, operating profit rose. The telecoms giant maintained its interim dividend at 4.5 cents per share.

Shares climbed 4.5% in early trade.

In the UK, revenues jumped 6% to €3.2 billion in the six months to the end of September. The return of international travel helped boost roaming charges.

Vodafone CEO Nick Read said he was seeing “very broad based” strength across the business and said today’s numbers showed he was building a “sustained growth engine” in a sector where growth has “historically been flat to negative.”

“Obviously the pandemic slowed down commercial momentum, now we’re seeing that coming back,” Read told the Standard.

Vodafone said full-year adjusted earnings were now set to be at the top end of forecasts at €15.2 billion to €15.4 billion. The forecast for free cash flow was upgraded by €100 million to €5.3 billion.

Read’s immediate priorities are doubling down on Germany, Vodafone’s largest market, improving performance in Spain and tapping into the EU’s Recovery Fund. The €750 billion fund was set up last year to help the bloc bounce back from the Covid-19 pandemic. €150 billion in earmarked for helping businesses digitize, which should boost demand for Vodafone’s services.

“We want to take them along the journey to have their digital services, for example a great website, a great app,” Read said.

Vodafone has also partnered with Deloitte on a healthcare digitization venture that will aim to benefit from the EU Recovery Fund spending.

The growth of 5G across Europe should also boost demand for Vodafone’s business services.

In consumer, Read said there was “decent demand for high end devices” such as the new iPhone.

As part of efforts to simplify the group, Vodafone span out its towers business Vantage in an IPO earlier this year. Vodafone still owns 82% of the German-listed business, which has risen 20% since its IPO in March.

Read said he was “delighted” with Vantage’s performance since listing and said Vodafone was considering its options with the business, including a possible industrial merger.

Vodafone shares rose 5.1p to 117.8p.

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