In Short:
Vodafone reported a slowdown in top-line growth due to law changes in Germany affecting TV services. Despite this, service revenue rose by 5.4% in the first quarter. The CEO mentioned strong revenue growth in Africa and Turkey, while Europe saw lower revenue due to inflation. Vodafone plans to improve performance in the second half. Shares fell by 2%. The company has simplified operations under new leadership.
Vodafone Reports Slow Down in Growth Due to Changes in German Market
By Paul Sandle
Vodafone reported a slowdown in top-line growth on Thursday, ending four quarters of accelerating improvement, after law changes related to selling TV services in Germany caused its largest market to go into reverse.
Performance and Outlook
The European and African mobile operator said the decline in Germany was expected and it was sticking to its guidance for the full year. Service revenue rose 5.4% in the first quarter. Chief Executive Margherita Della Valle said revenue was growing strongly in Africa and Turkey while in Europe lower inflation was slowing revenue growth and accelerating core earnings.
She mentioned that the performance is expected to improve in the second half of the year. Shares in Vodafone fell 2% following the news.
Impact in Germany and Company Strategy
In Germany, Vodafone has been impacted by the end of selling TV in bulk to apartment blocks. Della Valle stated that they have secured 2.6 million customers under the new teams and are confident in retaining around half of its TV customer base.
Since assuming the top position in April 2023, Della Valle has streamlined Vodafone by selling operations in Spain and Italy, agreeing to a merger with Hutchison’s Three in Britain, and announcing around 11,000 job cuts.
Future Projections
Vodafone expects to report core earnings of around 11 billion euros ($11.92 billion) and free cash flow of at least 2.4 billion euros for the year ending March 2025. Talks with Britain’s competition regulator regarding the Three deal are progressing well, with a decision expected by the end of the year.
