Vodafone boosted by growth in UK business

Vodafone’s UK operations benefited from increased customer numbers, higher contract prices, roaming and increased visitor revenue, helping to improve overall European performance in the first quarter.

Service revenue, a key indicator that includes contract payments, network usage, and sales from roaming but not mobile phones, increased 6.5% year-on-year in the three months to June 30, but last quarter.

CEO Nick Read said Vodafone’s roaming and number of visitors hadn’t returned to 2019 levels before the Covid pandemic, but “will come back quarterly.” ..

“Europeans traveling within Europe have returned to pre-pandemic levels,” he added, but the number of people traveling across regions has not recovered from Covid-19.

He said Asian customers hadn’t traveled “in the amount we’re used to” yet, but Americans were back. “When people travel, they use our services more. The volume is on.”

Overall, Europe’s largest broadband providers will provide year-round guidance, expecting interest, depreciation, taxes, and pre-amortization adjusted earnings to be between € 15 billion and € 15.5 billion. Said.

Vodafone said in a statement Monday that the group’s total sales for the previous quarter increased from € 11.1 billion in the previous year to € 11.3 billion.

However, Read warned that soaring energy prices would increase annual costs by a third compared to 2021.

“Vodafone’s biggest inflationary pressure is energy,” he told the Financial Times on Monday.

He said the company would need to spend another € 100 million to hedge energy costs for the full year, in addition to the € 200 million announced in May. Last year, Vodafone spent € 850 million on energy costs, primarily electricity.

“But when we see the turmoil around the world, we prove to be resilient as a growing company in Europe and Africa,” Reed added. “We are repeating the scope of guidance.”

Vodafone’s largest market, Germany’s service revenue, accounted for 30% of the group’s numbers and was 0.5 year-on-year in the first quarter, reflecting new legislation that made it easier for customers to switch contracts. % Decreased.

Credit Suisse analyst Jacob Bluestone said: “They are still losing customers on fixed lines, but we were able to halve the loss of fixed line customers and stabilize the number of mobile customers,” he added.

“It’s a step in the right direction. It’s getting better, but it’s not yet what you want,” he added. “They should expand their customer base by hundreds of thousands a year.”

The London-listed telecommunications group entered the domestic broadband market last year and is now providing full fiber broadband to 8 million UK households. We do not own a fixed residential network in the domestic market and lease capacity from our rivals.

Vodafone’s stake, which trimmed the previous 0.4% slide in the London trading on Monday, has not changed since Friday. This year it is up 15%.

The group has more than 25 million customers in Europe after acquiring cable networks in markets such as Germany and Spain.