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Vodafone confident in growth prospects after revenue upturn

Paul Sandle
·2-min read

By Paul Sandle

LONDON (Reuters) -Vodafone boss Nick Read gave an upbeat assessment of the mobile operator's post-pandemic prospects on Wednesday, predicting accelerating growth after it reported an increase in third-quarter revenue.

The world's second-largest mobile operator soundly beat analyst expectations for organic service revenue growth - including the likes of monthly access charges, airtime usage and roaming - in the three months to Dec. 31.

Its 0.4% growth compared with analyst expectations of a decline between 0.1% and 0.2%.

Shares in the company rose 4.9% to 133.6 pence by 1032 GMT.

Chief Executive Read said there was momentum across the business, including in its largest market, Germany.

"We are now firmly back into growth and I expect that growth to accelerate from here," he said on Wednesday.

Vodafone reiterated its guidance for adjusted full-year earnings of between 14.4 billion euros ($17.3 billion) and 14.6 billion euros, against 14.5 billion the previous year, while generating free cashflow of at least 5 billion euros.

Vodafone's organic service revenue had fallen 0.4% in the second quarter and 1.3% in the first quarter as roaming revenue was hit by the coronavirus-related drop in travel.

Germany produced the biggest quarter-on-quarter improvement among Vodafone's major European markets, with service revenue up 1%. Broadband customers had upgraded to higher-speed plans during the pandemic, Vodafone said.

The company's Italian business continued to be squeezed by fierce competition in the low-value part of the mobile market, while price competition in Spain was compounded by the pandemic's impact on roaming and visitor revenue.

A recent report in Spain's El Confidencial said Vodafone was in talks with rival MasMovil about a potential tie-up.

"I'm not going to comment on long-running speculation," Read said on Wednesday. "What I would say is I am very pleased with our performance in Spain."

"I think what you could say is consolidation is probably needed in Spain."

On Italy, Read said there were encouraging signs on what could be "a first tentative step to maybe more sustainable pricing".

Read also said the listing of the group's infrastructure company Vantage Towers was firmly on track to take place early this year.

Vodafone has chosen a full bank syndicate for the listing on the Frankfurt exchange in March, Reuters reported on Tuesday.

($1 = 0.8325 euros)

(Editing by Jane Merriman and David Goodman)