Vodafone hit by German legal changes as analysts warn of persistent challenges

Vodafone enjoyed better sales and profits in the first half, but progress was limited by a drop in performance in Germany.

The telecommunications giant reported that its services revenue rose 1.7 per cent to €15.1bn (£12.5bn) in the six months to the end of September, while overall turnover rose by almost €300m. euros to 18.3 billion euros.

Growth was partly driven by strong results in Turkey, where service revenue increased by a third to €1.1 billion thanks to higher prices and customer levels, as well as beneficial currency movements in the Kingdom United.

However, sales fell 3.9 percent to 6.1 billion euros in Germany due to new laws prohibiting landlords from selling wholesale televisions to apartment blocks and price increases that decreased the size of their base. of broadband customers.

Vodafone said the combination of higher service revenue and lower energy costs across Europe helped its adjusted profit before the unpleasantness rise 3.8 percent to 5.4 billion euros.

Meanwhile, its operating profits rose 28.3 percent to €2.4 billion after selling an 18 percent stake in Indus Towers to Bharti Airtel, one of India’s largest mobile network operators.

The sale is part of an initiative by Vodafone CEO Margherita Della Valle to reduce the company’s debts and streamline its operations.

Vodafone also sold its Spanish subsidiary in a £4.3bn deal to Zegona Communications and intends to complete the €8bn sale of its Italian business early next year.

In addition to this, the company intends to merge its domestic operations with Three UK, pending receipt of the green light from the Competition and Markets Authority.

Della Valle, who succeeded Nick Read as CEO of Vodafone last year, said: ‘The approval processes for our transactions in the UK and Italy are nearing completion.

“These will complete our program to reshape the group for its growth.”

Following these results, Vodafone has maintained its annual guidance, with free cash flow of at least €2.4 billion and earnings before unpleasant risks on an adjusted basis expected of around €11 billion.

The Newbury-based company further revealed that it had completed the second tranche of a €1 billion share buyback plan.

Mark Crouch, market analyst at eToro, said Vodafone’s results showed it was “gradually moving towards revitalization.”

‘Investors can take comfort from the company’s expanded share buyback program, which indicates management’s confidence in its long-term prospects.

“However, given the magnitude of the challenge, Vodafone’s proposed merger with Three UK may prove the most viable way forward.”

vodafone shares They fell 6.8 per cent to 68p on Tuesday afternoon, making them the biggest faller on the FTSE 100 index.

Third Bridge analyst Albie Amankona highlighted the “difficult challenges” facing the UK mobile telecommunications industry, with a “saturated market and high costs of unfulfilled 5G infrastructure” putting pressure on operators.

«To remain competitive, Vodafone will need to invest in exclusive content and integrated packages after the merger.

“Without these measures, Vodafone risks losing customers and, in the long term, the revenue needed for reinvestment, jeopardizing its future growth.”