Vodafone's Growth in Africa Helps Offset German Sales Decline
TLDR
- Vodafone's service revenue in Germany dropped 6.2% due to regulatory changes affecting TV packages with rent, losing 4 million customers.
- Revenue in African markets increased by 9.9%, contributing to the overall 1.7% revenue growth in the first half to €15.1 billion.
- Vodafone is undergoing a strategic overhaul with asset sales in Italy, Spain, and other regions, with a potential UK merger with Three on the horizon.
Vodafone Group Plc reported a 6.2% drop in service revenue in Germany for the September quarter, impacted by regulatory changes that stopped housing associations from bundling TV packages with rent. However, growth in African markets, where revenue rose 9.9%, and a strategic overhaul in Europe provide some relief.
The change resulted in a significant loss of customers, with Vodafone retaining just 4 million of the original 8.5 million households on these contracts. The decline aligned closely with analysts’ 6.1% forecast, and Vodafone’s shares fell 3.4% in London.
Despite German challenges, other markets helped lift overall revenue by 1.7% in the first half, reaching €15.1 billion. Chief Executive Margherita Della Valle is focused on restructuring Vodafone, with asset sales in Italy, Spain, and other regions bolstering the company’s balance sheet. Vodafone also anticipates a favorable UK merger with Three next month.
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Key Takeaways
Vodafone’s performance in Germany underscores regulatory challenges in its largest market, where service revenue comprises 36% of group revenue and 42% of adjusted Ebitdaal. Sales from asset disposals in Spain and Vantage Towers helped boost profit to €1.22 billion, shifting from a €155 million loss last year. Analysts see improvement potential as Vodafone adjusts to German regulations, with modest revenue gains expected in the coming quarters.
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